Global Markets in Flux: Dollar Dips, Euro Rises, and Economic Signals Abound
On Monday, the dollar declined to a two-month low, continuing its downward trend as traders grew confident that US interest rates have peaked, focusing on when the Federal Reserve might start reducing rates. The EUR/USD pair surged over 2% last week, closing above 1.0900 and reaching its highest since late August at over 1.0930 early Monday.
This strength in the euro is supported by hawkish remarks from ECB officials, countering early rate cut expectations. Bundesbank President Joachim Nagel warned against premature rate cuts, and ECB policymaker Robert Holzmann suggested the second quarter would be too soon for such a move.
Meanwhile, the UK faces recession risks, prompting market speculations that the Bank of England (BoE) might lower its 15-year high interest rates. This sentiment was bolstered by disappointing UK Retail Sales figures, potentially benefiting the Pound Sterling (GBP). Investors await further insights from the BoE Monetary Policy Report Hearings on Wednesday and the ECB Monetary Policy Meeting Accounts on Thursday.
In the US, the 10-year government bond yield hit a two-month low at 4.379% on Friday, restraining USD bulls and limiting gains for the USD/JPY pair. Conversely, the Japanese Yen (JPY) received a modest boost following optimistic comments from Japan's Finance Minister Sunichi Suzuki, who sees a unique opportunity to overcome deflation, lending strength to Japan's economy.
Gold prices continue to be underpinned by expectations that the Federal Reserve won't raise interest rates amid easing high-price concerns. Optimism following China's commitment to supporting its struggling real estate sector also influences the gold market, though its safe-haven appeal limits significant downside.
In the oil sector, OPEC+ is reportedly considering further supply cuts at its upcoming meeting on November 26 to bolster prices. Major producers Saudi Arabia and Russia are expected to maintain production cuts into the next year. This follows OPEC's steady 2024 oil demand growth forecast.