15/10/2024 - 07:28 UTCThe U.S. dollar remained firm at an over two-month high against most of its major peers, with the dollar index (USDX) up by another 0.15% on Monday. This move could be reflecting the market's growing belief that the Federal Reserve would implement a less steep reduction in interest rates. This sentiment was further solidified by comments from Fed officials and recent economic data that indicated a resilient U.S. economy. Consequently, traders appear to be adjusting their positions to anticipate a smaller rate cut in November.
The focus for the weeks to come is shifted to the upcoming US elections and the November interest rate decision where based on the CME Fedwatch tool, the probability of a 25-basis-point interest rate reduction is currently at 88.2%, while odds for rates to remain unchanged are at 11.8%.
The U.S. stock market concluded the trading session with a strong performance, bolstered by investor confidence in corporate earnings, with the US 500 and the US 30 hitting new all-time highs overnight. The move was fueled by a surge in semiconductor stocks and a 2.4% increase in the price of Nvidia, while the initial reports from the third-quarter earnings season, featuring impressive results from JPMorgan Chase and Wells Fargo, further boosted market sentiment. Other major banks, including Citigroup, Bank of America, and Goldman Sachs, are set to announce their quarterly financial performance later today.
On the energy front, WTI retreated by roughly 3% after Israeli Prime Minister Benjamin Netanyahu informed the United States that Israel is willing to target Iranian military targets, excluding nuclear and oil facilities, thereby easing immediate concerns regarding potential disruptions to oil supplies.
Some key events in the week ahead are today's Germany ZEW economic sentiment report, the US Empire State Manufacturing index, the ECB's interest rate decision on Thursday, key speeches by FOMC members, the Philly Fed Manufacturing index and US building permits.
The EUR/USD pair dropped to a new ten-week low on Monday, starting the trading week with further declines.
Attention is now turning to the German ZEW Economic Sentiment, set for release early Tuesday. Investors will be closely watching for insights into the health of the eurozone’s banking sector.
On Thursday, final inflation data for the Harmonized Index of Consumer Prices (HICP) will be published. However, this release is unlikely to spark significant market moves as traders focus on the ECB’s upcoming policy decision, where a 25-basis-point rate cut is widely expected.
Gold prices pulled back on Monday after reaching an intraday high of $2,6667 and ended the session with minor gains. The retreat comes as China's latest stimulus measures failed to lift market sentiment, while the US Dollar continued its upward momentum.
Over the weekend, new data highlighted deflationary pressures in China's economy, casting doubt on its ability to meet the 5% GDP growth target. In response, China’s Finance Minister, Lan Foan, reaffirmed the government's commitment to further stimulus, aimed at supporting the property market and recapitalizing state banks to bolster economic growth.
Geopolitical factors are also influencing gold markets, as newswires report that Israel held a security meeting to decide on its response to attacks from Iran and Hezbollah in Tel Aviv.
Oil prices fell sharply on Monday as OPEC revised down its global oil demand growth forecasts for both 2024 and 2025, while China’s oil imports dropped for the fifth consecutive month.
The latest Chinese stimulus measures failed to boost investor confidence, and markets remained on edge over the potential for Israeli strikes on Iranian oil infrastructure.
On Monday, OPEC lowered its global oil demand growth projection for 2024, marking the third consecutive downward revision. The group also trimmed its outlook for 2025, citing weaker-than-expected demand from China, the world’s largest crude oil importer.
On Monday, the U.S. Dollar hit a nine-week high in light trading. A stronger dollar tends to weigh on oil demand, making dollar-denominated crude more expensive for buyers using other currencies.
U.S. stock rose on Monday following a surge in technology stocks that pushed Wall Street to record highs.
Investors are now turning their attention to a wave of key earnings reports and economic data expected this week.
Technology stocks were the primary driver of Monday’s market gains. NVIDIA Corporation surged 2.4% to a record high. /r advancing during the session.
In addition to tech sector strength, markets were buoyed by expectations that the Federal Reserve will lower interest rates by at least 25 basis points in November, following stronger-than-expected inflation data for September.
On Wednesday, Morgan Stanley will wrap up bank earnings, while later in the week, Netflix Inc., Blackstone Inc. and American Express Co. are also expected to report.
The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.
Join iFOREX to get an education package and start taking advantage of market opportunities.
A beginner's e-book
$5,000 practice demo account
A 12-part video course
English 
Arabic - العربيه
Chinese Simplified - 中文 (简体)
Chinese Traditional - 中文 (繁體)
English (India)
Japanese - 日本語
Kazakh - Қазақ
Korean - 한국어 (대한민국)
Portuguese - Português
Russian - Русский
Spanish - Español
Thai - ไทย
By