Thursday's Thanksgiving and Black Friday slow down market activity, with a light economic calendar and mixed geopolitical news adding to the uncertainty. Central banks aren't providing clear signals, leaving markets on edge.
The US Dollar Index (DXY) remains under pressure, while Gold prices are rising, partly driven by China's plans for more economic stimulus.
Thanksgiving holiday trading weighed on the US Dollar, despite positive US data and risk-off headlines. However, S&P Global Ratings’ forecast for Q1 2025 suggests rising inflation, which could delay the Fed's rate cuts, supporting hopes for a stronger Dollar.
Geopolitical tensions continue, with Russian President Putin warning of severe consequences if Ukraine gains nuclear power. Meanwhile, China’s Commerce Ministry has signaled it may fight back against rising tariffs, raising concerns of potential trade wars.
On Thursday, European sentiment and German inflation data were mixed, which in turn challenged EURUSD bulls. However, the US Dollar’s weakness, month-end consolidation, and hawkish comments from European Central Bank (ECB) Governing Council member Francois Villeroy de Galhau set the stage for EURUSD’s first weekly gain in four weeks by early Friday.
GBPUSD is following the movement of its EUR counterpart and is on track to secure its first weekly gain in nine, as the US Dollar retreats. This comes despite ongoing UK economic challenges, with recent statistics highlighting struggles for the once global financial leader.
USDJPY sellers are in control as rising inflation in Japan sparks concerns about a hawkish Bank of Japan (BoJ). Fears of potential government intervention to protect the yen and its safe-haven status are adding to downward pressure on the pair. Earlier, Japan's Industry Minister announced up to 100 billion yen in support for eight key projects, including those in semiconductors and electronics. Despite this, Japan’s Industrial Production and Retail Sales were weaker than expected. However, stronger Tokyo inflation data has pushed USDJPY lower, reinforcing bearish sentiment.
Commodity-linked currencies, including the Australian, New Zealand, and Canadian Dollars, are benefiting from a softer US Dollar and slightly stronger domestic data. As a result, AUDUSD and NZDUSD are set for weekly gains, while USDCAD struggles to reverse its earlier-week rise, despite falling for three straight days.
Reserve Bank of Australia (RBA) Governor Michele Bullock ruled out the possibility of further rate cuts, stating that "underlying inflation is still too high to consider a near-term rate cut." Meanwhile, New Zealand's November Consumer Confidence surged to its highest level in three years, supporting NZDUSD buyers, even though it remains below the 100 threshold.
Gold prices recover from earlier losses, supported by the US Dollar’s retreat and mixed geopolitical news, including trade war concerns. However, buyers face challenges due to holiday slowdowns, month-end flows, and mixed signals from central banks, following a four-month uptrend.
Crude Oil edges higher, consolidating weekly losses, on chatters that the OPEC+ will discuss delaying output hike for Q1 2025 in its postponed meeting on December 05.
Bitcoin (BTCUSD) is trimming its weekly loss, while Ethereum (ETHUSD) gains for the second consecutive week. The rally in ETHUSD is driven by a reassessment of Trump-led optimism and growing institutional interest in Ethereum, while Bitcoin bulls take a pause.
Looking forward, the return of the US traders after Thanksgiving will join GDP from Canada and Switzerland, as well as German Retail Sales and Eurozone inflation, to entertain market players on Black Friday. However, the holiday mood, month-end consolidation, and caution ahead of Saturday's China PMI data could limit momentum.
With the US Dollar failing to support the hawkish Fed outlook and discussions of a US soft landing, the Greenback may remain pressured, especially in the absence of major data or events, unless geopolitical or trade tensions intensify. While this may not drive significant moves in EURUSD, GBPUSD, or other major pairs, USDJPY could see continued bearish pressure.
USDCAD may face further declines, supported by a rebound in crude oil and positive Canadian inflation and GDP data. Gold could see continued buying interest, despite lacking strong momentum, while crude oil may struggle to gain traction due to supply-demand uncertainty.
Cryptos could see cautious buying, while equities may continue to rise, buoyed by holiday season optimism in retail spending.
May the trading luck be with you!
