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09/12/2024 - 08:31 UTCThe U.S. dollar recovered against most major currencies on Friday, with the dollar index up by 0.23% after dropping to monthly lows, amid a disappointing jobs report, featuring higher unemployment and subdued job creation. Market participants are now waiting anxiously for next week's inflation data. This critical report will be a key determinant of the Federal Reserve's forthcoming interest rate decision.
Market expectations for a 25 basis point rate cut at the upcoming FOMC meeting, currently stand at 86%, as indicated by the CME FedWatch Tool.
The U.S. 30 retreated for a second straight session on Friday, while the US 500 and the US tech 100 reached record highs, as investors are betting on a rate cut from the Fed later this month, despite a slightly higher-than-anticipated jobs report in November. On the corporate side, a number of companies delivered impressive quarterly earnings, boosting Wall Street sentiment. DocuSign's stock price soared over 27% after the company raised its 2025 revenue forecast, following a strong third-quarter performance. Lululemon Athletica's shares climbed 16% as the sportswear maker increased its full-year outlook, driven by robust U.S. holiday season demand and strong international growth.
Oil prices declined for a third straight session on Friday as analysts projected a supply surplus next year on weak demand despite an OPEC+ decision to delay output hikes and extend deep production cuts to the end of 2026 to limit supply.
Bitcoin prices fluctuated within a wide range between $97 and $102K on Friday, with investors anticipating further signs to confirm whether a top is near. Overall crypto market capitalization is seeing a sharp increase, fueled by optimism surrounding regulatory easing for cryptocurrencies, however, market dominance appears to be shifting to lower cap altcoins in the past week. Noteworthy moves were seen in XRP and ETH both of which appear to be outperforming Bitcoin.
For the week ahead, markets will most likely be focusing on the US monthly inflation numbers, monetary policy statements from the BOC and the ECB Rate Statements and growth data from the UK. Some price action could also be seen on Monday, upon the release of US monthly PPI, jobless claims and crude oil inventories from the EIA
The EUR/USD broke above its three-week trading range on Friday, bolstered by the market’s initial reaction to the US Nonfarm Payrolls report. However, the pair’s gains were short-lived as the rally reversed quickly ending the session 0.22% lower.
US employment figures exceeded expectations in November, with payrolls increasing by 227,000 compared to the forecasted 200,000. Wage growth held steady at 4%, defying predictions of a slight slowdown to 3.9%. Despite the stronger job growth, the unemployment rate ticked up to 4.2% from 4.1%, sustaining hopes for a December rate cut by the Federal Reserve.
Despite the strong US labor data, the euro edged higher, supported by broader market dynamics. However, ongoing political turmoil in France remains a key factor to watch, as it could dampen any significant rallies in the common currency.
Gold prices posted minor losses on Friday following the release of the US Nonfarm Payrolls (NFP) report for November. The robust labor market figures have bolstered expectations for another Federal Reserve (Fed) rate cut in December. The implications of the labor market data for the Fed’s policy trajectory are significant.
Lower interest rates tend to benefit gold prices by reducing the opportunity cost of holding the non-yielding asset. However, the recent uptick in job additions has temporarily weighed on the yellow metal as markets reassess the Fed’s next moves.
Oil prices declined by over 1% on Friday, capping a week of losses as concerns about a supply surplus in 2024 overshadowed an OPEC+ decision to delay output hikes and extend production cuts through 2026.
The downward pressure on prices was partly driven by an increase in oil and gas rig activity in the United States, signaling rising output from the world’s largest crude producer. A slowdown in global oil demand, particularly from top importer China, has been a persistent drag on prices.
While OPEC+ production cuts provide a temporary floor for oil prices, the combination of weak demand, rising U.S. production, and persistent supply surpluses continue to weigh on the market.
The US Tech 100 and US 500 surged to record closing highs on Friday, buoyed by strong corporate forecasts from companies like Lululemon Athletica and optimistic U.S. jobs data that fueled speculation of a December Federal Reserve interest rate cut. Meanwhile, the US 30 ended lower, weighed down by a sharp decline in UnitedHealth Group shares.
The U.S. Labor Department reported a surge in job growth for November, though the unemployment rate ticked up to 4.2%, signaling a potentially easing labor market.
Rate futures now indicate a 90% probability of a 25-basis-point rate cut at the Fed’s December 17–18 policy meeting, up from 72% earlier this week.
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