Global Market Snapshot 25th November 2024

The foreign exchange market fluctuated due to a series of key economic data and central bank announcements. The US dollar slightly retreated, while the euro and the pound faced pressure. The USD/JPY pair continued to rise slightly, and the Canadian dollar’s movement was heavily influenced by oil prices.

The US Dollar Index opened lower and continued to decline, currently trading at 106.93, down approximately 0.5%, erasing all of last Friday’s gains. This occurred after President-elect Donald Trump nominated renowned investor Scott Bessent as the U.S. Treasury Secretary. Bessent, a Wall Street veteran and fiscal conservative, has alleviated market concerns over Trump potentially implementing harsh trade measures in the future.

Analysts believe that Bessent, who is respected on Wall Street, advocates for tax reform and deregulation, which could reduce the likelihood of stringent tariffs. This could help stabilize the economy and markets, making the nomination favourable for both the stock and bond markets, potentially limiting U.S. Treasury yields and the dollar. However, Bessent has also publicly supported a strong dollar and endorsed tariffs, suggesting that any retreat in the dollar may be short-lived.

USDJPY pair edged up to 154.29, nearing the upper end of its recent trading range. Although the interest rate differential between the US and Japan continues to support the upside for USD/JPY, the risk of potential intervention by Japanese authorities is limiting the pair’s upward momentum. The recent depreciation of the yen reflects Japan’s weak economic conditions and expectations of continued accommodative policies by the Bank of Japan. However, if the dollar appreciates further and reaches the upper limit of what Japanese authorities can tolerate, the market should be cautious of potential policy actions that could impact the USD/JPY trajectory.

EURUSD The euro rose 0.43% to $1.048, reaching an intraday high of 1.0500, recovering from last Friday’s two-year low of 1.0332. Data shows that the Eurozone’s composite PMI for November fell to 48.1, reflecting contractions in both manufacturing and services, indicating that the economy is rapidly losing momentum. As fundamental pressures intensify, European Central Bank policymakers face the dual challenges of economic slowdown and debt burdens, potentially forcing them to adopt a more accommodative policy stance, which further exacerbates selling pressure on the euro. Additionally, the slow progress in economic integration within the EU has become a risk factor of market concern and may have a long-term impact on the euro’s future trajectory.

GBPUSD The pound rebounded by 0.5% to $1.2592 but remained well below last week’s high of $1.2714. The UK’s November PMI dropped to 49.9, falling below the 50-neutral mark for the first time in over a year. The UK government’s plan to raise taxes on businesses further weakens the vitality of the private sector, intensifying market concerns about a potential economic recession. The Bank of England may need to increase policy easing measures to address the economic slowdown, but this will undoubtedly put greater downward pressure on the pound.

USDCAD rose 12 pips to 1.394. Canada’s retail sales grew 0.4% month-on-month in September, above 0.3% estimated. The Canadian dollar’s movements are clearly driven by dynamics in the oil market. Recently, oil prices have been volatile due to geopolitical uncertainties and unclear supply-demand outlooks, leading to increased fluctuations in the Canadian dollar. As signs of a global economic slowdown intensify, energy demand forecasts have been revised downward. If oil prices decline further, it could place additional pressure on the Canadian dollar. Moreover, the Canadian economy is sensitive to global trade and resource prices. The rising trade risks may weigh on the Canadian dollar. Looking ahead, whether the Canadian dollar can find support will depend on whether oil prices stabilize and if the Bank of Canada adjusts its policy stance.

BTC Bitcoin rose 0.33% to $98,180.