Wednesday saw a whirlwind of activity across major markets, influenced by key economic data releases and strategic moves ahead of a U.S. bank holiday and the month’s close.
Curious about what sparked the biggest shifts in recent trading days? Let’s break it down.
Key Headlines:
- Australia’s annual CPI held steady at 2.1% for October, falling short of the 2.5% expected
- China’s industrial profits dropped 4.3% year on year by October, accelerating from a 3.5% decline in September
- The Reserve Bank of New Zealand slashed interest rates by 50 basis points to 4.25% this November, with Governor Orr hinting at another cut in February
- German consumer sentiment took a nosedive from -18.4 to -23.3 in November as confidence in incomes and willingness to spend waned
- The U.S. Q3 preliminary GDP met expectations at 2.8%, while the price index edged up from 1.8% to 1.9% quarter on quarter
- Weekly jobless claims in the U.S. dipped slightly from 215K to 213K for the week ending November 23, amidst a rise in continuing claims to their highest level since November 2021
- U.S. durable goods orders increased by 0.2% in October, missing the 0.4% forecast, and core orders eased to 0.1% against expectations of a 0.2% rise
- The U.S. goods trade deficit shrank significantly from $108.7 billion to $99.1 billion, surpassing the $102.2 billion expected
- The U.S. core PCE price index remained steady at 0.3% month on month in October, as forecasted
- Pending home sales in the U.S. rose by 2.0% in October, contrary to an expected 2.1% decline
- U.S. personal income jumped from 0.3% to 0.6%, while personal spending cooled to 0.4% as predicted
- U.S. crude oil inventories dropped by 1.8 million barrels against an expected fall of 1.3 million
Market Reactions:
The trading session kicked off with the impact of declining industrial profits in China, setting a bearish tone. The approach of key U.S. data releases and end-of-month flows tempered demand for the U.S. dollar and safe-haven assets.
Gold surged to $2,658, and U.S. crude oil prices, amid ceasefire news between Israel and Hezbollah and increased U.S. crude inventories, climbed to $69.30 before cooling off.
In the U.S., a string of economic releases suggested robust growth, resilient consumer spending, and persistent inflation, driving the expectation that the Federal Reserve might cut rates by 25 basis points in December.
This speculation, coupled with end-of-month adjustments, weighed on U.S. 10-year yields and the dollar, potentially explaining the softer gold and oil prices. Meanwhile, U.S. stocks pulled back as high core PCE data dampened sentiment, trimming the week’s gains before the holiday break.
U.S. Dollar Movement:
Early trading saw the dollar maintaining narrow ranges after losing ground on Tuesday. The NZD/USD and USD/JPY moved against the trend, with the Kiwi pricing in the RBNZ’s rate cut and the USD/JPY extending its earlier slide.
Fresh selling emerged during early European trading, likely as traders adjusted positions anticipating U.S. economic data and month-end rebalancing.
The dollar regained some support as the U.S. session wore on, buoyed by reports of strong economic fundamentals, though it didn’t alter expectations of an upcoming Fed rate reduction. By London’s close, the dollar experienced some turbulence before stabilizing against major currencies.
What to Watch for Next:
- Spain’s flash CPI at 8:00 am GMT
- RBA Governor Bullock’s speech at 8:55 am GMT
- Germany’s preliminary CPI at 9:00 am GMT
- U.S. markets will be closed for a bank holiday
- Canada’s current account data at 1:30 pm GMT
- Tokyo’s core CPI and other key Japanese economic indicators later in the day
Forex traders should brace for action in the European session, with Spain and Germany’s inflation data likely setting the initial pace. The U.S. holiday may dampen volatility, shifting focus to Canada’s current account figures and Japan’s nighttime economic updates.
Stay tuned to your screens for potential swings during these events, and remember to utilize our Currency Correlation tool when planning your trades!
