10/12/2024 - 08:00 UTCThe U.S. dollar posted a moderate increase against most major currencies on Monday, with the dollar index up by 0.19% after dropping to monthly lows last week. Market attention is now focused on next week's inflation data due on Wednesday, as it will play a crucial role in shaping the Federal Reserve's monetary policy stance.
Market expectations for a 25 basis point rate cut at the upcoming FOMC meeting, currently stand at 89.5%, as indicated by the CME FedWatch Tool.
The main US stock indices closed lower on Monday, pressured by a decline in technology stocks, particularly Nvidia. Nvidia's shares dropped 2.6% after China initiated an antitrust investigation, seen as a potential retaliation against recent U.S. chip export restrictions. Additionally, Advanced Micro Devices experienced a significant 5.6% decline following a downgrade from Bank of America, citing increased competitive risks. Investors are now focused on Wednesday's release of the November Consumer Price Index (CPI) report. The headline CPI is expected to rise 2.7% year-over-year and 0.2% month-over-month. Core CPI, excluding food and energy, is also expected to remain above the Fed's 2% target. This report will provide clues about inflation, the U.S. economy, and the potential for interest rate cuts.
Oil prices gained on Monday, fueled by China's stimulus pledges and geopolitical tensions in Syria. Traders are cautious ahead of upcoming economic data from China and the U.S., as well as an OPEC monthly report.
Crypto markets were hit by a wave of profit-taking on Monday, with Bitcoin down by 3.77% and Ethereum losing 7.34% of its value by the end of the session.
For the Tuesday, markets will most likely be focusing on OPEC Meetings to assess possible shifts in production levels that can have a significant impact on oil prices. Some price action is also expected upon the release of Gamestop earnings. For the week ahead, US monthly inflation numbers will be in the spotlight, along with monetary policy statements from the BOC and the ECB and growth data from the UK.
The EUR/USD pair edged lower on Monday, slipping away from the 1.0600 mark after encountering resistance near this key level last week.
The Euro began the trading week on a subdued note, weighed down by concerns over a potential ECB rate cut. Investor sentiment in the Eurozone continues to waver, with the December Sentix Investor Confidence survey dropping to -17.5, the lowest level in over a year.
Meanwhile, the Federal Reserve Bank of New York released its latest consumer survey on Monday, highlighting a mixed outlook for U.S. economic conditions.
Both Euro and U.S. Dollar traders are in a holding pattern, awaiting clarity from this week’s pivotal economic releases.
Gold prices edged higher on Monday buoyed by its safe-haven appeal amid escalating geopolitical tensions in the Middle East following the collapse of the Bashar al-Assad regime in Syria.
In addition to geopolitical concerns, Gold received support from the People's Bank of China's (PBoC) announcement over the weekend that it resumed Gold purchases in November after a six-month hiatus. This development has reignited interest in the precious metal, further strengthening its appeal.
Oil prices climbed higher on Monday as China, the world’s largest importer of crude, unveiled plans to implement an "appropriately loose" monetary policy aimed at revitalizing its economy. This move has sparked hopes for a rebound in global oil demand.
Developments in Syria have added a geopolitical risk premium to oil prices. Rebel forces have reportedly taken control of Damascus after years of civil conflict, with President Bashar al-Assad fleeing to Russia. Ongoing conflicts, including the Israel-Hamas war and the Russia-Ukraine conflict, continue to pose risks to global oil supply stability.
All three main U.S. indexes closed Monday’s session in the red, dragged down by a decline in tech stocks led by Nvidia. Investors remain cautious ahead of Wednesday’s pivotal U.S. Consumer Price Index (CPI) release, which could provide further clues on the Federal Reserve’s monetary policy trajectory.
The technology sector faced headwinds, with Nvidia (NASDAQ: NVDA) slipping 2.44% after China launched an anti-monopoly investigation into the company, a move widely seen as a response to recent U.S. restrictions on chip exports. Adding to the sector’s woes, Advanced Micro Devices plunged 5.52% after Bank of America downgraded the stock from "buy" to "neutral," citing increasing competitive pressures in the semiconductor space.
Wednesday’s November CPI report is expected to provide critical insights into inflation trends and the Federal Reserve’s policy outlook. While the Fed is widely anticipated to lower interest rates by 25 basis points next week, it is expected to adopt a slower pace of rate cuts in 2025 due to persistently high inflation and a robust labor market.
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