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21/11/2023 - 08:14 UTCThe U.S. dollar index (USDX) traded moderately lower for yet another day on Monday, ending the session down by 0.41%, closing in on the 103.0 mark. Overall price action remains subdued as investors wait for further insights from the October FOMC meeting minutes that could possibly affect the trajectory of the dollar in the near term.
According to the CME Group Fed Watch Tool, the possibility that rates will stay unchanged in December remains at a solid 100% on Tuesday, from 99.8% on Friday.
The main U.S. stock indices posted a moderate increase on Monday, with the US 500 up by 0.88%, the US 30 rising by 0.64%, and the US tech 100 posting a 1.49% increase. A sharp drop in Treasury yields boosted the equities market, while bets over a possible ending of the Fed’s monetary tightening cycle added further support. An additional boost came from the technology sector as gains in major Nvidia suppliers raise optimism ahead of the quarterly results from the world’s most valuable chipmaker.
Focus now shifts to the upcoming minutes of the Fed’s October meeting for more cues on monetary policy. Rates were left unchanged during the meeting, and officials reiterated plans to keep rates higher for longer. In addition, currency market trading volumes expected to be limited this week, due to the upcoming Thanksgiving holiday.
ECB President Christine Lagarde's speech in Berlin is also in the spotlight, as investors watch closely for additional guidance on the future path of European monetary policy.
Aside from the Lagarde speech and the FOMC meeting minutes, other highlights for Tuesday include consumer price reports from Canada, existing home sales numbers from the U.S. and monetary policy report hearings from the U.K. On the earnings front, Best Buy, iQIYI, MINISO, Baidu, nVIDIA, Autodesk and Gaotu Techedu will publish their quarterly reports.
The EUR/USD pair has risen for a second consecutive day with daily gains of 0.36%, breaking above the 1.0900 level to the highest level in three months near 1.0950.
Market expectations that the Federal Reserve is done raising interest rates continue to weigh on the US Dollar, while at the same time, it is being driven by the rise in stock prices on Wall Street.
Later today, the Federal Reserve (Fed) will release the minutes of its latest FOMC meeting. In terms of US data, the Chicago Fed National Index and Existing Home Sales are scheduled. In Europe, the upcoming critical report will be the preliminary November PMIs, set to be released on Thursday.
Gold prices rose on Monday ending the session 0.34% higher amid a weaker dollar and Treasury yields as markets priced in no more hikes from the Federal Reserve.
Markets were now focused squarely on the minutes of the Fed’s October meeting, which were due later today. While the central bank is expected to reiterate its stance on higher-for-longer rates, a slew of weak inflation and labour readings saw traders betting that the Fed had little room to push rates higher.
Oil prices climbed almost 2% on Monday as further supply cuts in OPEC+ production is expected to be announced following a meeting of member countries early next week.
These cuts include additional voluntary cuts by Saudi Arabia and Russia, and the two major producers have vowed to continue their supply cuts until the end of the year but may decide to announce more reductions to support prices further.
China’s central bank kept its benchmark loan prime rate unchanged at record low levels earlier Monday, and regulators vowed to provide more policy support to the beleaguered real estate sector, a major driver of the second-largest economy.
Wall Street's three major indexes closed higher on Monday with US Tech 100 rally leading the charge as heavyweight Microsoft hit a record high after it hired prominent artificial intelligence executives. The US 500 added 0.88%, while US 30 and US Tech 100 rose by 0.64% and 1.49% respectively.
Microsoft CEO Satya Nadella said Sam Altman, who headed OpenAI until he was ousted late last week, was set to join Microsoft to lead a new advanced AI research team. The news set a positive tone for the market with other heavyweight technology stocks including Nvidia and Apple also gaining ground.
Also on Tuesday, the Fed is expected to issue minutes of its November meeting, which may provide clues on the direction of U.S. interest rates.
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