The U.S. dollar posted a mild recovery against most major currencies on Monday, with the dollar index (USDX) up by 0.33% ahead of a critical week in terms of economic data that may impact the prospect of U.S. rate cuts. Some support was seen in the dollar recently following demands by the U.S. President-elect Donald Trump on Saturday that BRICS member countries commit to not creating a new currency that could replace the dollar or face 100% tariffs.
Market participants are closely watching U.S. employment data due on Friday to refine their predictions regarding a potential interest rate cut by the Federal Reserve later this month. While analysts anticipate a 195,000 job gain in November, October's employment data could be subject to adjustments due to factors such as adverse weather, labor disruptions, and a low survey participation rate. The unemployment rate is projected to rise slightly to 4.2%.
According to the CME FedWatch Tool, market participants are currently assigning a 74.5% probability to a 25 basis point interest rate cut by the Federal Reserve. However, there is a significant 25.5% probability that the Fed will maintain interest rates at their current level.
US stock markets soared to fresh highs on Monday, fueled by a rally in major tech companies. Investor optimism surrounding artificial intelligence persisted, driving gains in the tech sector. This momentum followed Washington's recent export restrictions on 140 Chinese firms, aimed at limiting China's access to cutting-edge chips and equipment crucial for AI development.
The Dow Jones Industrial Average saw strong performances from tech giants, with Microsoft Corporation leading the pack at 1.77% growth, followed by Amazon.com Inc at 1.36% and Apple Inc at 0.95%. Investors now turn their attention to the earnings report from Salesforce Inc, due for release later this week.
For the Tuesday, markets will most likely be focusing on the JOLTS Job Openings employment data, speeches from FOMC members Kugler and Goolsbee and earnings reports from Salesforce and Zuora. Later this week, some price action is expected upon the release of Non-Farm Payrolls report, the US unemployment rate, a speech by Federal Reserve’s Jerome Powell and a Preliminary consumer sentiment and inflation expectations survey by the University of Michigan.