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Global market sentiment remained upbeat this past week. On Wall Street, the Dow Jones, S&P 500 and Nasdaq 100 gained about 0.3%, 1.1% and 1.9%, respectively. This is as the VIX market ‘fear gauge’ closed at its lowest since the beginning of this year. Meanwhile, the United Kingdom’s FTSE 100 and Hong Kong’s Hang Seng Index climbed 0.93% and 6.27%, respectively.
A key development was another notable decline in the 10-year Treasury yield, which sank 5.5% to touch the lowest since September. Since October, markets have been pricing in an increasingly dovish Federal Reserve. A closer look at the Fed implied curve shows that traders have added at least 75-basis points in rate cuts 2 years out.
Unsurprisingly, this has coincided with the worst month for the US Dollar since September 2010 as the DXY Index tumbled 5.1%. A clear winner from the dollar and bond yield drop was gold. XAU/USD surged 8.3% in November, the most since the early stages of the global pandemic back in 2020. The Japanese Yen was another winner, strengthening 7.1% as USD/JPY tumbled.
Markets have been focusing on the expected change in the Federal Reserve’s pace of tightening. Countless officials have been alluding to a reduction in the pace of tightening amid what could be a turning point in inflation. But, as last week’s US non-farm payrolls report showed, the labor market remains tight.
Crude oil has remained quiet. All eyes in the week ahead turn to the next OPEC+ meeting and the fate of supply. Meanwhile, AUD/USD will be eyeing the Reserve Bank of Australia rate decision. USD/CAD also has the Bank of Canada to look forward to. China releases its latest inflation report. What else is in store for markets in the week ahead?
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How Markets Performed – Week of 11/28
Global indices made a bid to charge the holiday rally early this year with a US-led break higher this past week. Yet, follow through is starting flag even as we move into December trade. With expected activity levels sinking but anticipation for key event risk rising, volatility is a high risk and trends are in jeopardy.
Sterling is going to need to do some heavy lifting to keep GBP/USD moving higher, and next week’s economic calendar is of little help.
The Australian Dollar stretched higher with the US Dollar copping a flogging following not hawkish enough comments from Fed Chief Powell. Will AUD/USD make a new peak?
The US Dollar saw its worst month since September 2010 as the markets aggressively priced in a dovish Federal Reserve down the road. A tight US jobs report hints that USD’s move might be overdone.
The Canadian dollar looks set to continue its recent struggles. Will the Bank of Canada spring another surprise at next week’s policy meeting?
The Dollar suffered a further stumble in its retreat over these past two months. For the DXY Index, we ended the longest stretch above the 200-day moving average on record; while key pairs like USDJPY, EURUSD and GBPUSD are on the cusp of furthering technical momentum.
Gold and silver have both benefitted from a weaker dollar but silver is the standout of the two metals. Gold consolidating at stern resistance, silver continues higher
US equity market rallies have taken an NFP-induced pause at the end of the week but still remain in positive territory for the week.
— Article Body Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com
— Individual Articles Composed by DailyFX Team Members
To contact Daniel, follow him on Twitter:@ddubrovskyFX