Markets showed mixed sentiment today as traders likely positioned themselves ahead of FOMC members’ speeches, while Bitcoin continued its post-election rally to new highs.
Learn about the main headlines that affected price movement in financial markets in the past trading sessions:
Titles:
- Westpac-MI Consumer sentiment in Australia slowed from 6.2% to 5.3% in November
- NAB: Australia’s business confidence jumped from -2 to 5 in October; The employment index decreased
- Initial machine tool orders in Japan jumped 9.3% year-on-year after a 6.4% year-on-year decline in October.
- Change in UK claimants (October): 26.7K (20.0K forecast; 10.1K previous)
- UK unemployment rate rose to 4.3% (expect 4.0%; previous forecast 3.9%)
- UK Average gross earnings growth of 4.3% year-on-year (4.0% forecast; 3.9% previously forecast)
- Bank of England Chief Economist Bell: The latest employment data indicated that inflation pressures remained high
- ZEW economic sentiment index in Germany (November): 7.4 (expect 12.9; previous forecast 13.1)
- Germany’s final CPI was confirmed to rise by 0.4% in October; Annual inflation at 2.0%
- US President-elect Trump expressed his support for increasing oil exploration
- OPEC+ lowered its forecast for global demand for the fourth month in a row, and warned that non-OPEC countries may increase production.
- Richmond Fed President Barkin noted the flexibility of the US labor market
- US NFIB Business Optimism Index (October): 93.7 (91.6 expected; previous 91.5)
- Minneapolis Fed President Kashkari: Only a higher inflation surprise might stop interest rate cuts
Broad market price movement:
Overlay of the US dollar against major currencies Chart by TradingView
The day saw marked variation across asset classes, with Treasury yields strengthening as US bond markets reopened after the Veterans Day holiday. Meanwhile, stocks struggled to maintain momentum, with the S&P 500, Nasdaq and Dow all closing in the red.
Bitcoin continued to benefit from post-election optimism, reaching all-time highs of around $90,000, before retreating and hovering below record levels.
US 10-year bond yields rose steadily throughout the day, likely in response to the Federal Reserve’s hawkish comments, with the 10-year bond yield rising to 2.20%.
Commodities showed mixed trajectories, with gold down 0.82% while WTI initially rose before paring gains, weighed by Trump’s comments on drilling and OPEC+’s global demand and production outlook.
Forex market behavior: US dollar against major currencies:
Overlay of the US dollar against major currencies Chart by TradingView
The dollar showed broad-based strength, with a shallow rise that began during the Asian session and rebounded during US market hours, even extending its rise after speeches by FOMC members.
On the other hand, the British pound was likely on the downside due to mixed employment results in the UK and Bank of England Chief Economist Bill’s comments about persistent inflationary pressures.
After a brief pullback during Asian market hours, USD/JPY managed to maintain an upward trajectory and closed 0.65% higher, while commodity currencies AUD and NZD appeared to be weighed down by weak consumer confidence numbers from Australia earlier in the day.
Only the Canadian dollar and the Swiss franc were able to put up a good fight against the greenback, cutting their losses and consolidating as the US session continued.
Potential catalysts coming on the economic calendar:
- Testimony from Bank of England Monetary Policy Committee member Mann at 9:45pm GMT
- US headline and core CPI 1:30 pm GMT
- FOMC Member Kashkari will speak at 1:30 PM GMT
- FOMC Member Logan’s speech at 2:45 PM GMT
- Speech by FOMC Member Muslim at 6:00 PM GMT
- FOMC Member Schmid’s speech at 6:30 PM GMT
- Federal Budget Balance at 7:00 PM GMT
Dollar pairs could see another volatile day, as markets prepare for what is highly anticipated US Consumer Price Index reportfollowed by a handful of testimony by Federal Reserve officials.
Keep an eye out for any major surprises, as well as potential shifts in central bank rhetoric, which could steer the US currency in a strong direction and don’t forget to check the new currency correlation tool when making any trades!