14/11/2024 - 08:30 UTCThe dollar extended its gains against most major currencies on Wednesday, with the dollar index (USDX) up by another 0.51%. On the weekly chart USDX is up by 1.6% as of Thursday 07:50 AM GMT hitting levels last seen in October 2023 and closing in on its highest price level for the past year, at 107.06. The move came following a CPI report from the US that was in line with expectations, as investors continue to assess monetary policy and inflation outlook in the world's largest economy.
The CME FedWatch tool suggests that market participants are anticipating a more aggressive rate cut of 25 basis points in December, with a 82.8% probability, while odds for rates to remain unchanged are at 17.2%.
Asian markets declined on Wednesday, with the Japan 225 down by more than 1%, and the Hong Kong 50 down by 0.30% as at 07:23 AM GMT. Investors appear concerned about the potential impact of a Trump presidency on Sino-U.S. relations and do not appear satisfied with Beijing's latest support measures to shore up China's ailing economy, after the finance ministry unveiled tax incentives on home and land transactions on Wednesday.
Sentiment in Wall Street improved on Wednesday with all three primary stock indices ending the session moderately higher after a release of inflation data that aligned with market expectations. The US Consumer Price Index data, released earlier in the day, indicated a year-over-year increase of 2.6% in October, in line with the consensus forecast. The month-over-month figure also matched expectations at 0.2%. These figures alleviated concerns regarding the potential for a surprise inflation reading to prompt the Federal Reserve to maintain interest rates at their current level in December.
In the cryptos front, Bitcoin rallied to a new record high of $93,536 on Wednesday, closing the day 2.77% higher and outperforming the majority of altcoins including Ethereum. Dogecoin, was one of the few alts that posted higher gains than Bitcoin, ending the session 5% higher. The overall crypto market capitalization high another record high of over $3.12 trillion.
The focus for Thursday lies on the core PPI data report, jobless claims, crude oil inventories from the Energy information administration and speeches from Fed chairman Jerome Powell, BOE governor Bailey and ECB president Lagarde. Some volatility could also be observed on Friday, upon the release of the U.S. monthly retail sales numbers.
The euro continues to lose ground against the dollar, dropping as low as $1.0555 on Wednesday, its lowest level since October 2023, as U.S. bond yields with long maturity rose alongside the dollar on Thursday. The benchmark 10-year Treasury yield hit its highest since July 1 and the 30-year bond yield hovered near a five-month peak.
In addition, CPI numbers were in line with the consensus forecast with investors now shifting their focus to key speeches from fed chairman Powell and ECB president Lagarde later today.
Spot gold prices extended their decline on Wednesday, currently trading approximately 4.74% lower on a weekly basis as at 08:20 AM GMT time. The appreciation of the US dollar to a one-year high, driven by uncertainty regarding the long-term direction of interest rates and rising treasury yields, exerted significant downward pressure on metals markets.
Market participants are closely monitoring the upcoming release of the October Producer Price Index data, for further hints on how the Fed will proceed in the upcoming FOMC meeting
Oil prices traded almost unchanged for a second consecutive session on Wednesday with both WTI and Brent trading 2.3% and 2.9% lower respectively on the weekly chart as of 08:26 AM GMT Thursday.
Data released by the American Petroleum Institute on Wednesday indicated a decline of approximately 777,000 barrels in US oil inventories for the week ending November 8th. This unexpected decrease contrasts with analyst forecasts of a 1-million-barrel increase and the prior week's build of 3.1 million barrels.
Analysts anticipate more cues on demand from China and the International Energy Agency.
The US 500 is seen trading sideways for the past two days, hovering right below its record high of $6053.74, as optimism over a Donald Trump presidency appears to be cooling and following a key report from the US that came out in line with expectations.
In corporate news, Rivian Automotive surged 14% after announcing a boost in investment from Volkswagen (VOWG) for their joint venture. Volkswagen plans to invest up to $5.8 billion by 2027, providing crucial funding for Rivian's R2 electric vehicle production and the development of its midsize platform (R2/R3) at the GA plant, according to Wedbush. Spotify Technology (SPOT) stock rose 11% following a positive earnings report. The music streaming service reported impressive subscriber growth for Q3 and delivered a solid forecast for the year ahead.
Some price action could be seen upon a speech by Fed chairman Powell later today.
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