Despite mixed geopolitical news, the US Dollar shines this week, boosted by strong US S&P and ISM Manufacturing PMIs. The Greenback shrugged off new disagreements among Fed officials on rate cuts. Tensions from Trump’s trade remarks and Gaza ceasefire updates weighed on risk sentiment ahead of key US jobs and consumer data. However, positive China PMI results, stimulus news, and hopes of increased US holiday spending helped lift the market mood.
The US Dollar Index (DXY) steadies after its biggest weekly loss since August. The Dollar’s strength, combined with political concerns in France, weighs on the Euro (EUR), while weak UK data halts the British Pound’s recovery. The Japanese Yen (JPY) pares gains as the US Dollar rebounds, and Antipodean currencies struggle despite positive China PMI and stimulus news, with trade war fears still lingering. Meanwhile, Gold and Crude Oil face pressure after posting weekly and monthly losses, and Cryptocurrencies retreat from multi-month highs.
Despite recent Eurozone data not being overly negative, ECB officials continue pushing for more rate cuts. This, combined with political concerns in France, including a potential no-confidence vote for Barnier, and trade tensions with the US and China, put pressure on EURUSD prices.
Weak UK Manufacturing PMI for November raised doubts about Britain’s economic strength, putting downward pressure on GBPUSD. A disappointing government budget compounded this and concerns that inexperience could lead to mismanagement of the country.
USDJPY recovers from weekly and monthly losses as concerns over Japan’s market intervention and the Bank of Japan's ability to raise rates ease. A light economic calendar in Japan and talks of reduced monetary policy divergence between Japan and the US also support the rebound of the risk-sensitive pair.
The US dollar’s rebound, combined with challenges in China’s trade and housing markets, reverses gains for the Australian, New Zealand, and Canadian dollar. Economic concerns in Australia and New Zealand, along with doubts about the Bank of Canada’s rate defense, pressure AUDUSD and NZDUSD, while boosting USDCAD, especially ahead of this week’s US/Canada jobs report.
Mixed market sentiment and uncertainty support Gold prices ahead of this week’s key US data, though buyers stay cautious due to a stronger US Dollar. Meanwhile, Crude Oil lacks momentum and remains under pressure ahead of Thursday’s OPEC+ meeting.
Despite the US Dollar's rebound and mixed market sentiment weighing on riskier assets, cryptocurrencies are nearing the multi-month highs reached in November. Optimism around Donald Trump and the potential approval of ETH staking ETFs by the US SEC are driving attention. As a result, Bitcoin (BTCUSD) and Ethereum (ETHUSD) show mild gains following their strong November rally.
Looking ahead, the Swiss Consumer Price Index and US JOLTS Job Openings for October, along with a speech from Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr, will catch the attention of intraday traders. However, the focus will be on risk news and preparations for Friday’s US/Canada employment data, as well as the US UoM Consumer Sentiment and inflation expectations for December.
The US Dollar is expected to reverse last week’s losses, potentially boosting USDJPY’s recovery and putting pressure on EURUSD and GBPUSD. Gold may not see significant declines due to its safe-haven status, while Crude Oil could drop further if OPEC+ signals an output increase, especially with the UAE pushing for higher capacity. AUDUSD, NZDUSD, and USDCAD may continue their recent trends, while cryptocurrencies are unlikely to fall much due to industry optimism.
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