Market momentum was somewhat subdued early Tuesday after a positive day on Wall Street. Traders are navigating concerns over the U.S. Federal Reserve, mixed geopolitical updates, and trade signals, all while awaiting important U.S. economic data later today. Major currency pairs had a quiet session, with limited movement and little data to guide market direction.
The Dallas Fed manufacturing index for November fell to -10.40, down from -5.00 last month. U.S. industrial output was revised to -0.1%, with capacity utilization also lowered. The Federal Reserve made annual revisions to industrial production data, indicating weaker manufacturing activity in August.
Fed officials, including Mary Daly and Christopher Waller, voiced support for a potential rate cut in December.
Meanwhile, U.S. Commerce Secretary Howard Lutnick suggested that if tariffs are struck down, immediate actions could follow.
News flow remained light. U.S. President Trump and Japan’s PM Takaichi had a brief call following Trump’s discussion with China's President Xi. There were also mentions of closer energy cooperation between Russia and China, but no significant details.
U.S. and Ukraine talks on the peace process were described as productive, though some points of disagreement remain. Ukrainian President Zelenskyy noted progress on the peace framework, but called for no strikes on Ukraine during peace discussions. Russia and China have also discussed expanding energy ties, which could help counter Western sanctions.
The EU is preparing to send a team to Washington to address various trade issues, with a focus on steel tariffs. Meanwhile, ECB's Nagel stated that the current euro level ($1.16) is not concerning, but inflation remains a concern, especially in services.
Trump accepted an invitation from China’s Xi to visit Beijing in April, following a positive phone call between the two leaders. They discussed issues like Ukraine, fentanyl, and trade, with Trump praising the strong U.S.-China relationship. The two leaders also agreed on the importance of regular communication.
In other news, the U.S. is urging the U.K. to ban Chinese firms from critical infrastructure, escalating security tensions between the two countries. Trump also plans to speak with Venezuela's Maduro, though no date has been set.
Australia's consumer confidence index rose slightly to 87.1, the highest since early September, driven by strong retail sales ahead of Black Friday.
The UK Treasury has reportedly asked banks to publicly endorse the Budget, encouraging them to highlight policies that will boost lending.
In Canada, Prime Minister Mark Carney and Alberta Premier Danielle Smith are set to announce an energy deal. S&P Global forecasts moderate economic growth in Canada, despite challenges like high inflation and weak business investment. The agency also warns that U.S. tariffs may dampen corporate confidence.
U.S. stock indices ended the day with solid gains, led by the NASDAQ, which had its largest percentage increase since May. Alphabet rose in after-hours trading, spurred by news that Meta is in talks to spend billions on Google’s TPU chips for data center expansion, which negatively impacted Nvidia’s AI GPU dominance.
The U.S. Dollar Index remained flat for a third day, while traditional safe-haven assets like the Japanese Yen and Gold saw slight gains. EURUSD and GBPUSD stalled, while AUDUSD and NZDUSD saw mild losses. USDCAD continued its five-day uptrend. Crude oil gave up some of the previous day’s gains, while Bitcoin and Ethereum remained defensive after a four-week downtrend.
EURUSD retraced after briefly ending its five-day losing streak, as concerns over the situation in Ukraine and a cautious mood ahead of key U.S. data today weighed on the market. Traders are also uncertain about the ECB’s direction and the potential for a Fed pause in December, which is putting pressure on Euro buyers.
Similarly, GBPUSD ended its three-day winning streak as traders grew cautious ahead of both the U.S. data release and the upcoming UK budget on Wednesday. Additionally, news that the U.S. advised the UK to avoid Chinese technology over security risks, along with the UK government urging local banks and institutions to publicly back its plans, has raised concerns among traders.
USDJPY turned weak, influenced by a mix of concerns over a potential Bank of Japan rate hike, ongoing China-Japan tensions, and hopes of stimulus from Tokyo. There were also discussions about the Japanese government possibly intervening to defend the yen as USDJPY prices rose. However, the cautious mood ahead of today’s key U.S. data and several important statistics from Japan on Friday kept USDJPY movements in check, especially as Japanese traders returned after a long weekend.
AUDUSD and NZDUSD followed their risk-sensitive nature, falling as geopolitical tensions surrounding China weighed on sentiment. Meanwhile, USDCAD continued its five-day uptrend, supported by a pullback in crude oil prices and positive news from S&P, which highlighted Canada's improving economic outlook.
Gold continued its rebound from a two-month support level, driven by market uncertainty and the USD’s failure to gain momentum. On the other hand, Crude Oil struggled to hold onto the previous day's rebound from a month’s low. Concerns over increased Russian oil supplies and a lack of significant fallout from U.S.-Venezuela tensions weighed on prices. Additionally, expectations of higher U.S. weekly inventories, as indicated by the API, further pressured WTI crude oil.
Bitcoin (BTC) and Ethereum (ETH) edged higher after a slightly positive start to the week, as traders looked ahead to today’s U.S. data with cautious optimism. News about Meta and Alphabet, Google's parent company, alongside a general rise in tech stocks, also helped lift both equities and cryptocurrencies.
Looking ahead, a series of key U.S. data points will capture the attention of momentum traders, alongside ongoing trade and geopolitical developments. Among the highlights are U.S. PPI, Retail Sales, Consumer Confidence, and Housing data, all adding to a busy economic calendar, along with mid-tier data from the EU and Central Bank discussions.
With the market eyeing the December FOMC and largely negative U.S. data expectations, the U.S. Dollar could face a pullback, potentially giving risk assets like equities and cryptocurrencies room to recover from their recent weekly losses.
May the trading luck be with you!
