08/11/2024 - 09:20 UTCThe dollar fell against most major currencies on Thursday, with the dollar index (USDX) down by 0.79%, after hitting four-month highs following the outcome of the U.S. presidential election. The long awaited November FOMC meeting concluded with a 25 bps rate cut as expected and Federal Reserve Chair Jerome Powell failing to offer any strong clues that the U.S. central bank is likely to pause rate cuts in the near-term.
The Fed saw the job market starting to slow down, and inflation heading in the right direction. A super strong September jobs report had people thinking fewer rate cuts were coming, but then October's numbers were a bit disappointing.
According to the CME Fedwatch tool, odds for a 25bps rate cut in December stand at 25.3% while a 50 bps rate cut is seen as more likely with odds at 74.7%.
Positive sentiment in Wall Street continues, with the US 500 index surging to new record highs after the Federal Reserve delivered a widely expected rate cut. The prospect of further monetary easing has become less likely, with market participants now anticipating only two rate reductions amid concerns that a big government spending plan could fuel inflation.
In corporate news, Moderna's (MRNA) stock price dropped 2.88% even though they made a surprise profit in the third quarter from strong COVID-19 vaccine sales. But the company said they expect lower sales next year. Lyft, Inc. shares soared approximately 23% after the ride-hailing company reported sales exceeding estimates, provided optimistic guidance, and unveiled a new partnership for autonomous vehicles. Sony reported on Friday a 73% rise in group operating profit in the July-September quarter, buoyed by strong sales in its game and network business.
In the cryptos front, Bitcoin broke its all-time high of $76,462 and marked a new one at $76,902 as an interest rate cut by the Federal Reserve and the potential increase in money supply kept crypto markets upbeat. In addition, following the election of Trump, bets increased that upcoming policies would give Bitcoin more legitimacy as an investment vehicle, boosting its adoption by institutional investors. The overall crypto market capitalization rose from $2.63 trillion dollars to $2.67.
The focus for Friday lies on the preliminary release of the University of Michigan consumer sentiment and inflation expectations survey as well as Canada’s unemployment rate. FOMC members Bowman and Musalem will also testify during the day.
On Thursday, the EUR/USD pair retraced back to the 1.0800 mark following the Federal Reserve’s widely anticipated 25-basis-point rate cut.
With November’s rate decision finalized, market participants now shift focus to December 18, when the Fed could potentially introduce another 25 bps cut, concluding its year-end monetary policy strategy.
The Federal Reserve's latest rate adjustment, building on a hefty 50 bps cut in September, aligned with market expectations, helping to maintain financial market stability. However, investors and analysts are now assessing the likelihood of a third consecutive rate cut in December.
To cap off a busy week, the University of Michigan’s Consumer Sentiment Index for November will be released on Friday.
Gold prices held steady and gained over 1% after the Federal Reserve’s expected 25-basis-point rate cut.
The Fed’s latest statement reflected confidence in the economy, noting solid expansion despite some softening in labor market conditions. Inflation has moved closer to the Fed’s 2% target, though it remains slightly elevated.
The Federal Open Market Committee (FOMC) emphasized that future decisions will hinge on incoming data, the evolving economic outlook, and a careful assessment of risks.
Oil prices rose on Thursday as markets evaluated how President-elect Donald Trump’s policy approach might affect oil supplies, while U.S. drillers scaled back output in anticipation of Hurricane Rafael. Gains were tempered, however, by a strong dollar and reduced crude imports in China.
Market sentiment was bolstered by expectations that the Trump administration might tighten sanctions on Iran and Venezuela.
Additional downward pressure came from October data showing a 9% year-over-year decline in China’s crude imports—the sixth consecutive month of decreases—as well as rising U.S. crude inventories.
Wall Street indexes stayed largely upbeat on Thursday, extending gains after Trump’s election sparked a rally earlier in the week.
Markets continued to digest the Federal Reserve’s outlook on future rate cuts following President-elect Donald Trump’s victory, which signaled the potential for more expansionary policies in the coming years.
The Federal Reserve cut its benchmark interest rate by 25 basis points to a range of 4.5% to 4.75% on Thursday, a widely anticipated move. Fed Chair Jerome Powell clarified that Trump’s recent election victory would have no immediate impact on monetary policy but reaffirmed a data-driven approach to future easing. Powell noted that inflation is moderating in line with the Fed’s targets, while economic growth remains robust.
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