Markets showed mixed sentiment today as traders likely positioned themselves ahead of FOMC members’ speeches, while bitcoin continued its post-election rally to fresh highs.
Check out which headlines influenced price action in the financial markets in the past trading sessions:
Headlines:
- Australia Westpac-MI consumer sentiment slowed from 6.2% to 5.3% in November
- NAB: Australia business confidence jumped from -2 to 5 in October; Employment index edged down
- Japan preliminary machine tool orders jumped by 9.3% y/y after a 6.4% y/y decline in October
- U.K. Claimant Count Change (Oct): 26.7K (20.0K forecast; 10.1K previous)
- U.K. Unemployment rate rose to 4.3% (4.0% forecast; 3.9% previous)
- U.K. Average total earnings growth was 4.3% y/y (4.0% forecast; 3.9% previous)
- BOE Chief Economist Pill: Latest labour data suggested inflation pressures remained elevated
- Germany ZEW Economic Sentiment Index (Nov): 7.4 (12.9 forecast; 13.1 previous)
- Germany final CPI confirmed at 0.4% in October; Annual inflation at 2.0%
- U.S. President-Elect Trump signaled support for increased oil drilling
- OPEC+ downgraded global demand forecast for fourth month in a row, warned that non-OPEC countries could increase production
- Richmond Fed President Barkin noted resilient U.S. labor market
- NFIB U.S. Business Optimism Index (Oct): 93.7 (91.6 forecast; 91.5 previous)
- Minneapolis Fed President Kashkari: Only elevated inflation surprise may pause rate cuts
Broad Market Price Action:
Overlay of USD vs. Major Currencies Chart by TradingView
The day saw notable divergence across asset classes, with Treasury yields strengthening as U.S. bond markets reopened after the Veterans Day holiday. Meanwhile equities struggled to maintain momentum, with the S&P 500, Nasdaq and Dow all closing in the red.
Bitcoin continued to benefit from post-election optimism, reaching new all-time highs around $90,000, before pulling back and hovering below record levels.
U.S. 10-year yields climbed steadily throughout the day, likely responding to hawkish Fed commentary, with the 10-year yield gaining 2.20%.
Commodities showed divergent paths, with gold declining 0.82% while WTI crude initially rallied before reversing gains, influenced by Trump’s drilling comments and OPEC+ global demand and production forecasts.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
The dollar demonstrated broad-based strength, with a shallow climb starting during the Asian session and picking up during U.S. market hours, even extending its climb after FOMC members’ speeches.
Sterling, on the other hand, was on bearish footing likely due to mixed U.K. employment results and BOE Chief Economist Pill’s comments about persistent inflationary pressures.
After a brief pullback during Asian market hours, USD/JPY was able to maintain an upward trajectory and close with a 0.65% gain while commodity currencies AUD and NZD appeared to be bogged down by weak consumer confidence figures from Australia earlier in the day.
Only CAD and CHF were able to put up a decent fight versus the dollar, trimming their losses and consolidating as the U.S. session rolled along.
Upcoming Potential Catalysts on the Economic Calendar:
- BOE MPC Member Mann’s testimony at 9:45 pm GMT
- U.S. headline and core CPI at 1:30 pm GMT
- FOMC member Kashkari’s speech at 1:30 pm GMT
- FOMC member Logan’s speech at 2:45 pm GMT
- FOMC member Musalem’s speech at 6:00 pm GMT
- FOMC member Schmid’s speech at 6:30 pm GMT
- Federal Budget Balance at 7:00 pm GMT
Dollar pairs could be in for another volatile day, as markets gear up for the highly-anticipated U.S. CPI report, followed by a handful of testimonies by Fed officials.
Keep an eye out for any major surprises, as well as potential shifts in central bank rhetoric, that could steer the U.S. currency in a strong direction and don’t forget to check our new Currency Correlation tool when taking any trades!
