18/11/2024 - 08:30 UTCThe U.S. dollar fell against major currencies on Friday, with the dollar index (USDX) retreating from a one-year highs following five consecutive daily gains. Dollar saw strong support by market anticipations that the upcoming administration's policies, such as imposing trade tariffs, tightening immigration regulations, and increasing the deficit, would lead to higher inflation. In addition, Fed Chairman Jerome Powell said on Thursday the U.S. central bank did not need to rush to lower interest rates, adding further support to the dollar and prompting traders to lower their bets for a high pace of rate cuts.
The CME FedWatch tool suggests that market participants are anticipating a more aggressive rate cut of 25 basis points in December, with a 61.9% probability, while odds for rates to remain unchanged are at 38.1%.
Oil prices experienced a modest increase on Monday as geopolitical tensions between Russia and Ukraine heightened. Russia launched a significant air strike on Ukraine, while the U.S. eased restrictions on Ukraine's use of U.S.-supplied weapons. Despite this geopolitical risk, concerns about global oil demand, particularly in China, limited price gains.
Wall Street experienced another downturn on Friday, with all three major stock indices closing lower following the recent speech of Fed Chair Powell, which dampened expectations about a potential rate cut in December and ahead of a Q3 earnings report by NVIDIA which Is due on Wednesday. Tesla shares surged over 4% after-hours on Robinhood following Bloomberg's report that the U.S. Department of Transportation is prioritizing a federal framework for fully self-driving vehicles. The development is seen as a major boost for Tesla, which has been leading the charge for fully autonomous driving. CEO Elon Musk has been a major supporter of President-elect Donald Trump and is now considered in his inner circle.
In the cryptos front, Bitcoin appears to have stabilized within the range of $89K to $92K over the past few sessions with investors looking for the next catalyst that could boost prices for the main cryptocurrencies beyond record highs, with Bitcoin potentially crossing the much discussed $100K mark.
For the week ahead, markets will most likely be focusing on upcoming U.S. manufacturing and services data along with existing home sales, jobless claims, the Philly Fed Manufacturing index and a consumer sentiment survey from the University of Michigan
The Bank of Japan Governor sent a hawkish signal on Monday, reaffirming the central bank's intention to raise interest rates. Although he didn't explicitly mention a December hike, his warning about the risks of prolonged low real interest rates fueled speculation. Investors are keenly eyeing the BOJ's next move, as a rate hike could provide much-needed support for the battered yen, which has recently hit a multi-month low against the dollar.
The yen has fallen around 7% since October against the dollar dollar and last week weakened past the 156 per dollar level for the first time since July, keeping traders on alert for any intervention from Japanese authorities.
Gold prices saw their worst weekly performance since June 2021 as U.S. Treasury yields climbed near multi-month highs and amid expectations on fewer Fed rate cuts than initially expected. Futures now imply less than 100 basis points of rate cuts by late 2025, down from over 100 a few weeks ago. This shift follows Powell's recent comments and concerns about inflationary pressures from potential U.S. economic policies. The dollar's appreciation to a one-year high added further pressure on gold this week.
Bitcoin retraced from its all-time high of $93.536 and appears to have stabilized within the range of $89K to $92K over the past few sessions with investors looking for the next catalyst that could boost prices for the main cryptocurrencies beyond record highs, with Bitcoin potentially hitting the much discussed $100K mark.
In addition, XRP made a suprise comeback in the past week, posting gains of around 91%. The volume of XRP also surged, contributing significantly to the overall volume of cryptocurrencies.
The US 500 fell on Friday, as hawkish comments from Fed Chair Powell, which raised doubts about a potential rate cut in December are still in play.
In corporate news, Nvidia's will be releasing its Q3 earnings report on Wednesday. Analysts expect strong revenue growth from the AI chipmaker. Nvidia's stock is up nearly 200% this year, significantly contributing to the S&P 500's recent record highs. However, its stellar performance has raised expectations, and a disappointing earnings report could dampen market sentiment.
Tesla stock skyrocketed over 4% in after-hours trading on Robinhood after a bullish report from Bloomberg. The news that the U.S. government is set to prioritize a federal framework for fully self-driving vehicles ignited investor enthusiasm and is seen as a a major win for Tesla.
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