17/12/2024 - 08:30 UTCThe U.S. dollar was almost unchanged against most major currencies on Monday as Investors are wary ahead of the Federal Reserve's interest rate decision on December 18th. While a rate cut is anticipated, there's concern that the Fed may signal slower rate reductions going forward.
Expectations for a 25-basis point rate cut at the upcoming FOMC meeting, currently stand at 97.1%, as indicated by the CME FedWatch Tool. Odds for rates to remain unchanged stand at 2.9%.
Asian stocks traded mixed on Tuesday as weak economic data from China dampened risk sentiment and as investors brace for interest rate decisions from major central banks due later this week. While the Federal Reserve is expected to take action on rate cuts, the Bank of Japan is anticipated to maintain its current interest rate policy, aiming to assess global risks and domestic wage growth prospects for 2024.
The US stock market displayed mixed performance on Friday, with the US tech 100 hitting new record highs supported by gains in major tech-sector players, while the US 500 rose moderately, and the US 30 continues a series of consecutive daily declines.
In corporate news, Broadcom surged over 10%, buoying the broader semiconductor sector. The chipmaker's strong quarterly earnings have led to bullish Wall Street sentiment, adding over $300 billion to its market value. Tesla also hit a new record high, fueled by post-election optimism. Its market cap now approaches $1.45 trillion, with Wedbush analysts raising their price target to $515. 1 While MicroStrategy was added to the Nasdaq 100 index, its stock closed flat.
On the cryptos front, Bitcoin marked a new record high on Monday on sustained optimism over the potential for a Strategic Reserve under incoming U.S. President Donald Trump.
For Tuesday markets will most likely be focusing on the ZEW Economic Sentiment report from Germany and the eurozone while later on U.S. Core Retail Sales will be in the spotlight. For the week ahead, markets will most likely be focusing on the interest rate decision of the FOMC due on Wednesday and the Fed’s favorite gauge for inflation, the Core PCE Price Index.
The EUR/USD pair began the week on a cautiously bullish note, inching toward the upper range of its recent consolidation zone just above the 1.0500 level. With limited European economic data on the docket this week, market attention has shifted to a busy schedule of U.S. releases.
Despite appearances from multiple European Central Bank (ECB) officials, markets showed little reaction to their commentary. Looking across the Atlantic, market focus is firmly on the Federal Reserve’s rate decision on Wednesday. According to the CME FedWatch Tool, a 25 basis point rate cut is nearly fully priced in at 99.1%.
Later today, Retail Sales data for November is due to be released, but its impact may be muted as markets focus on the Fed’s final rate decision of the year.
Gold prices edged up slightly on Monday as investors awaited the Federal Open Market Committee’s (FOMC) upcoming policy decision.
The U.S. economic calendar began the week on a subdued note, featuring mixed results from the S&P Global Flash PMIs for December. Manufacturing activity weakened after showing improvement last month, while the Services PMI climbed to its highest level in 2024. The Federal Reserve is set to convene its final policy meeting of the year on December 17-18.
Oil prices slipped on Monday, retreating from multi-week highs as weak consumer spending data in China—the world’s largest oil importer—raised demand concerns. Investors also paused ahead of the U.S. Federal Reserve's upcoming interest rate decision.
Slower-than-expected Chinese retail sales highlighted the fragility of the country’s economy, which continues to face headwinds from U.S. trade tariffs under a second Trump administration.
Market participants are also eyeing U.S. inventory data due this week. Preliminary estimates suggest crude oil and distillate stockpiles fell last week, while gasoline inventories likely rose.
U.S. main indexes steadied on Monday evening after Wall Street saw a mixed session. A rally in technology stocks propelled the US Tech 100 to a record high and US 500 posted moderate gains, while the US 30 notched its eighth consecutive day of losses.
While the rate cut is largely priced in by the markets, especially after recent Wall Street gains—the spotlight will be on the Fed’s outlook. Beyond the Fed’s decision, investors will be watching retail sales and industrial production figures later this week for further insights into the state of the U.S. economy.
Major technology stocks continued their rally on Monday, lifting the US Tech 100 to fresh record highs. The tech-heavy index benefited from strength in chip stocks and large-cap names, driven by optimism over near-term rate cuts.
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