The dollar extended its rally to its eighth week this week, its longest winning streak of the year, and has gained about 2.6% so far this month. Investors are also facing geopolitical tensions, which are now escalating. Investors will naturally seek the protection of the dollar.
Affected by the escalation of the conflict between Russia and Ukraine, the price of WTI crude oil exceeded $71 per barrel, while the price of gold exceeded $2,700 per ounce, a total increase of $153.12 in a week, an increase of 5.97%, the best week since March 2023. The sharp rebound in gold prices was driven by a surge in safe-haven demand, geopolitical tensions and a shift in Federal Reserve interest rate expectations.
Bitcoin continues to hit new highs and is heading towards $100,000. The latest developments include the decision by U.S. Securities and Exchange Commission Chairman Gary Gensler to step down in January this year.
The US October PCE data and the Federal Reserve's November meeting minutes will be the focus of the market next week. The following are the key points that the market will focus on in the new week (all Beijing time):
Central Bank Dynamics: The Federal Reserve will release meeting minutes, which may have important gold price signals in the future
Fed:
At 03:00 on Wednesday, the Federal Reserve will release the minutes of its November monetary policy meeting.
Minutes of the Federal Reserve's monetary policy meeting to be released next week will provide investors with more details on the discussions surrounding the November rate cut. Money market pricing shows that investors currently expect the Fed to have a slightly higher than 50% chance of a December rate cut, with a total rate cut of only 67 basis points between now and the end of 2025.
HSBC economists noted that the minutes of the Federal Reserve's November meeting may show some policymakers' discussions on the possible economic impact of the US election results.
Market observers said that while a stronger dollar and lower expectations of a Federal Reserve rate cut have put pressure on gold, geopolitical factors are once again the main driver of gold prices.
Gold closed above the key pivot level at $2,663.51 last week, solidifying its position as a key support area. If prices hold above this level, gold could move higher, potentially testing the all-time high of $2,790.17. Failure to hold this level could result in a pullback, with support at $2,631.04 and $2,571.68 as potential downside targets. Traders should focus on the potential for a climb toward $2,750 to $2,790, while being wary of any reversal associated with a shift in Fed guidance or easing geopolitical risks.
FxPro analyst Alex Kupzikevich said that with the increasing tensions in the Russian-Ukrainian war and the pressure on the stock market, gold has returned firmly to the focus of investors. Gold prices found buyers soon after falling below the 50-day moving average, with safe-haven demand outweighing the pressure from the strengthening of the US dollar. Kupzikevich said in a report that whether it can rise further will be an important price signal. He also added that the downward correction of gold in early November was ultimately not large, and if gold can quickly re-reach its previous highs, its long-term target price will be in the $3,400 per ounce area.
Other central banks:
At 09:00 on Wednesday, the Reserve Bank of New Zealand will announce its interest rate decision and monetary policy statement.
At 10:00 on Wednesday, New Zealand Reserve Bank Chairman Orr held a monetary policy press conference
A Reuters poll showed 27 of 30 economists expected the Reserve Bank of New Zealand to cut the cash rate by 50 basis points to 4.25% on November 27. The median forecast showed a total of 100 basis points of rate cuts by 2025.
Goldman Sachs expects the Reserve Bank of New Zealand to cut interest rates by 50 basis points next week and another 50 basis points in February next year, with a 25 basis point cut at each meeting after February, bringing the final interest rate to 3% in July 2025.
Important data: Stubborn inflation is expected to strengthen the Fed's "slowdown" policy! The dollar momentum remains strong
At 23:00 on Tuesday, the US Conference Board Consumer Confidence Index for November and the US Richmond Fed Manufacturing Index for November
At 21:30 on Wednesday, the number of initial jobless claims in the United States for the week ending November 23 and the revised annualized quarterly rate of real GDP in the third quarter of the United States
At 23:00 on Wednesday, the annual rate/monthly rate of the core PCE price index in the United States in October and the monthly rate of personal spending in the United States in October
At 18:00 on Thursday, the Eurozone November Industrial Climate Index and the Eurozone November Economic Climate Index
At 21:00 on Thursday, the final monthly rate of German CPI for November
Friday 07:30, Japan's October unemployment rate
Friday 16:55, Germany's November seasonally adjusted unemployment number/unemployment rate
At 18:00 on Friday, the euro area's November CPI annual/month rate preliminary value
At 21:30 on Friday, Canada's September GDP monthly rate
Friday 22:45, US November Chicago PMI
The core PCE price index, released next Wednesday, is the preferred inflation measure of Federal Reserve officials. October's core PCE is expected to rise 0.3% from September and 2.8% from a year ago, which would be the biggest increase since April. The report is also expected to reveal the resilience of household spending and steady income growth in the early fourth quarter.
Data from the United States is likely to continue to support the dollar, fueled by speculation that Trump's tariffs and tax cuts will spur inflation and add fuel to the economy. Speculative traders increased their bets on a stronger dollar in the week ended Nov. 19 to their most bullish level since late June, according to data from the Commodity Futures Trading Commission.
"As long as the U.S. exceptional growth story continues, I will not stand in front of this train," said Paresh Upadhyaya, director of fixed income and currency strategy at Amundi US Inc. Deutsche Bank said not all of Trump's policies have been priced in, and the dollar has more room to rise. George Saravelos, global head of foreign exchange research at the bank, said financial markets have only priced in 30% of the "extremist" scenario in which Trump implements the most extreme policies.
In the eurozone, data this week showed that the eurozone's PMI entered the contraction range in November, leading to expectations of rate cuts. If the data next week continues to be bleak, expectations of a 50 basis point rate cut by the ECB in December will surge. Pay special attention to the eurozone's preliminary November CPI next Friday. Traders expect Trump's extensive global tariff plan to hit economic growth in the European region and force the ECB to cut interest rates more aggressively. The market expects the ECB to cut interest rates by about 150 basis points by December 2025, while the Federal Reserve expects a 70 basis point cut.
The euro has fallen to its lowest level in two years. In the options market, a key gauge of expected price swings in the euro against the dollar rose to its highest level in 19 months. Risk reversals also further showed that the market favors put options that bet on further declines in the euro against the dollar. Hedge funds also increased their bearish bets on the euro in the week ended November 19. "The full implementation of Trump's tariff proposals on countries with large goods trade surpluses with the United States means a big rally for the dollar across the board, especially towards parity against the euro," said Skylar Montgomery Koning, a currency strategist at Barclays in New York.
Company earnings: The market is betting that Trump will not let the US stock market fall
The earnings season is coming to an end, with Meituan (03690.HK), Zoom (ZM.O), Dell (DELL.N) and others set to release their results next week.
The "Trump trade" has again become the tone of the U.S. stock market this week. Thomas Lee of Fundstrat believes that small-cap and cyclical stocks still have room to rise given President-elect Trump's deregulation plans and general "animal spirits." He also believes that the "Trump put option" will keep the broader market active. The belief that Trump will not let the economy languish is helping U.S. stocks rise, at least for now.
Lee believes that “when sentiment reaches the ‘bullish extreme,’ that’s when we see stock prices ‘perfect.’ We are not there yet in several ways.”
Bank of America strategists believe that the Nasdaq 100 Index has risen more than 4% this month and is approaching a level that could trigger a liquidation in the U.S. stock market relative to the S&P 500.
Market Holiday Arrangement:
On Thursday (November 28), the New York Stock Exchange was closed for Thanksgiving. Trading of precious metals and US crude oil futures contracts under CME ended ahead of schedule at 03:30 Beijing time on the 29th, and trading of stock index futures contracts ended ahead of schedule at 02:00 Beijing time on the 29th. Trading of Brent crude oil futures contracts under Intercontinental Exchange (ICE) ended ahead of schedule at 02:30 Beijing time on the 29th.
On Friday (November 29), the New York Stock Exchange closed early at 02:00 Beijing time on the 30th due to Thanksgiving. Trading of precious metals, US crude oil, and foreign exchange futures contracts under CME ended early at 03:45 Beijing time on the 30th, and trading of stock index futures contracts ended early at 02:15 Beijing time on the 30th. Trading of Brent crude oil futures contracts under the Intercontinental Exchange (ICE) ended early at 04:00 Beijing time on the 30th.
Article forwarded from: Jinshi Data