Risk sentiment is low early Tuesday, following a quiet Monday due to US and Canadian holidays. Concerns over Trump’s "Make America Great Again" policies and China’s struggles to boost growth despite stimulus are weighing on markets. However, easing political uncertainty in the US, talks of a softer US-China trade war, and China’s economic support measures lift optimism ahead of key data this week.
Market jitters and optimism around the US drive US Dollar strength, pressuring Gold, Crude Oil, and other major currencies. Meanwhile, Bitcoin is rallying in hopes of looser regulations and record inflows.
The US Dollar’s strength, combined with economic concerns in the Eurozone and UK, is pushing EURUSD and GBPUSD lower. EURUSD hits its lowest point since late April, while GBPUSD revisits mid-August lows. Meanwhile, USDJPY is edging higher after Japanese PM Shigeru Ishiba announced a $65 billion plan to boost Japan’s chip and AI industries, along with upcoming talks on wage negotiations.
Despite some positive domestic data, the US Dollar's strength and China’s struggles are weighing on the Australian, New Zealand, and Canadian Dollars.
In Australia, strong Business Confidence and Conditions data from NAB failed to boost the AUDUSD, partly due to a dip in Consumer Confidence. NAB’s Business Confidence rose to a nearly two-year high at +5, while Business Conditions stayed at +7. However, the Westpac Consumer Confidence Index for November slipped to 5.3% from 6.2%.
Similarly, NZDUSD remains under pressure, tracking its Aussie counterpart despite an improvement in New Zealand’s October Electronic Card Retail Sales.
Meanwhile, USDCAD continues its three-day uptrend as the US Dollar strengthens, combined with weaker Crude Oil prices and a dovish outlook for the Bank of Canada.
Gold has fallen to its lowest level in over a month, marking a third consecutive day of losses, while Crude Oil is also on a three-day downtrend, hitting a monthly low. Both commodities are under pressure from reduced US election uncertainty and President-elect Donald Trump’s push to strengthen the US Dollar. Additionally, a slowdown in gold demand from India after the festival season and a pause in China’s demand are further weighing on prices.
Irrespective of the US Dollar’s strength, Bitcoin (BTCUSD) and Ethereum (ETHUSD) are still attracting buyers, driven by strong ETF inflows and industry optimism following Donald Trump’s election win. Recent news of MicroStrategy's largest-ever single-day Bitcoin purchase has pushed BTCUSD toward a new record high near $89,000.
Today promises a busier market as US and Canadian traders return after the long weekend. Key events likely to fuel momentum include the monthly ZEW sentiment data from the Eurozone and Germany, followed by the UK employment report. Inflation data from India and speeches from several Fed officials could also increase market volatility.
However, the US Dollar is expected to remain strong ahead of this week’s US inflation report and a speech from Fed Chair Jerome Powell, potentially putting downside pressure on EURUSD, GBPUSD, and other major currencies, as well as Gold and Crude Oil prices. Meanwhile, USDJPY, Bitcoin, and USDCAD are likely to continue their upward trends unless negative surprises occur, which are unlikely.
May the trading luck be with you!
