Weekly Global Market Highlights
This week, the US dollar remained quite volatile, supported by solid ADP jobs data and the Fed’s cautious stance, despite an ongoing government shutdown. The yen and euro weakened, while gold fell on dollar strength and higher US yields. Oil prices dropped due to weaker global demand, and UK growth uncertainty weighed on the pound. Overall, markets favoured safe and high-yield assets, while risk sentiment remained mixed across equities and commodities.
Dollar Reaction Post Fed Rate Cut
The Federal Reserve cut interest rates in its October meeting despite the ongoing government shutdown, which had delayed key economic data releases. However, Chair Powell emphasized that future rate cuts are not assured, signaling a cautious and data-dependent stance ahead.
Bank of England Holds Rates Steady
The BoE decided not to change interest rates as inflation remains above target but is expected to slow down gradually. Markets interpreted the cautious stance as uncertainty about UK growth.
US Jobs Data Shows Economy Still Strong
The US added more jobs than expected in October, signalling that the labour market remains solid despite concerns about slowing growth. Consumer confidence softened slightly, but spending stayed strong.
Oil Prices Fall on Demand Concerns
Global oil prices dropped as signs of weaker demand from China and high US inventories raised concerns. Traders also reacted to slowing industrial activity in Europe and Asia.
Gold Prices Decline
Gold prices remained rangebound, showing inverse correlation with the U.S. dollar as bond yields stayed volatile. Profit-taking after the recent rally kept prices muted.
Eurozone Growth Slows
European data indicated weaker manufacturing and services activity, signaling slower economic growth. Inflation moderated but remained below prior highs.
US Treasury Yields Rise
US government bond yields climbed as investors anticipated the Fed would keep rates elevated for longer, following robust job and economic data.
Major Currency Pair Movements
- EUR/USD: Slight drop; dollar strong, euro weak.
- USD/JPY: Up; yen remains weak.
- GBP/USD: Stable; waiting for new triggers.
- USD/CAD: Slight rise; dollar strength beats weak oil.
- AUD/USD: Down; strong dollar weighs.
- USD/CHF: Up; dollar favoured amid uncertainty.
- XAU/USD (Gold): Subdued; strong dollar and higher yields.
Trader’s Takeaway
- The US dollar remains strong, driving most major currency moves.
- Yen weakness keeps USD/JPY and other yen pairs trending higher.
- The Euro and the Pound are moving cautiously in tight ranges.
- Gold may stay under pressure as the dollar and US yields remain strong.
- Oil and risk-linked currencies show mixed sentiment amid global demand concerns.
What to Watch Next Week
- US Government Shutdown: Any resolution or extension could impact the dollar and stock markets.
- Fed & Interest Rates: Watch for updates on rate cuts or signals affecting USD pairs.
- Tech Stocks & AI Deals: Performance of Mag 7 and US–South Korea AI investments may move US indices.
- Gold & Bond Yields: Dollar strength and rising yields will continue to influence gold prices.
Summary
The US dollar stayed strong, while the yen kept weakening. The euro and pound traded in tight ranges, and gold faced pressure. Markets focused on tech stocks, AI deals, and awaited updates on the US economy and government shutdown.
