The US dollar declined against the yen and Swiss franc amid a busy week of central bank decisions and US economic data releases, with expectations of a Bank of Japan rate hike and potential rate changes by the ECB and Bank of England. Key US data, including jobs and inflation reports, are awaited to clarify the Federal Reserve's policy outlook, while cryptocurrencies like Bitcoin and Ether continue to decline.
TikTok's algorithm will be retrained using US user data under a deal approved by the Trump administration, involving Oracle and a new joint venture, to address national security concerns and ensure the app's continued operation in the US.
European stocks remained steady while bonds faced pressure ahead of key US economic data, with Chinese tech stocks surging and gold prices rising due to a weaker dollar. The week’s focus is on US employment and manufacturing reports, which could influence Federal Reserve rate decisions. Political uncertainties in France and ongoing trade disputes also impact markets, alongside rising European bond yields and a strengthening euro.
European stocks rose slightly amid mixed global cues, with Chinese tech surging and bond yields in Europe climbing due to political and fiscal concerns. The focus remains on upcoming US economic data, which could influence Federal Reserve rate decisions, while geopolitical issues and trade policies continue to impact markets. Gold and oil prices also moved higher amid currency fluctuations and supply concerns.
The US dollar reached its highest level in over five weeks amid expectations of strong economic data and a stable Federal Reserve policy, boosting the currency against other major peers and shifting market focus from trade uncertainties to US economic strength.
Asian shares trade mostly sideways near seven-month highs as investors await clarity on the global interest rate easing cycle, with Japan's Nikkei snapping a three-day losing streak but still on track for its steepest weekly decline in three months. Attention turns to U.S. producer price data and retail sales figures for February ahead of the Federal Reserve's policy meeting next week, while speculation swirls about a potential policy pivot from the Bank of Japan. The dollar struggles to break away from recent lows, and in China, the blue-chip CSI300 Index and Shanghai Composite Index both fall more than 0.6% while Hong Kong's Hang Seng Index slides 1% due to news of a global trade association representing biotechnology companies taking steps to "separate" from a Chinese member.
World stock markets rise ahead of key U.S. inflation data and after the U.S. approved the first exchange-traded funds (ETFs) to track bitcoin. Market attention is focused on the upcoming U.S. consumer price index report for December, with expectations for a potential impact on market reactions. Additionally, the approval of bitcoin ETFs and anticipation of U.S. earnings season are driving investor focus, while the dollar remains steady ahead of the inflation report.
Gold prices rallied above resistance at $2040/oz level, driven by growing safe haven appeal amid geopolitical tensions in the Middle East and weakness in the US Dollar. Ongoing comments from Fed policymakers about rate cuts have weighed on the Greenback, while US data, particularly the PCE data and Q3 GDP number, could impact rate expectations. From a technical perspective, a daily close above $2040 could lead to a run towards resistance at $2050, but further upside may be limited due to potential retracement and resistance levels. Retail traders are overwhelmingly long on Gold, suggesting potential challenges for further gains.
In the week ahead, investors will be closely watching U.S. data, including the release of the personal consumption expenditures report and updates on housing sector indicators. There is speculation about a potential Santa Claus rally in the stock market, although some optimism has been dampened by comments from the Fed Bank of New York President. The Bank of Japan may be inching towards a policy pivot, and expectations are mounting that they could end negative interest rates. Gold is on track for its first annual gain since 2020, driven by a weaker dollar and expectations for rate cuts in 2024. In the U.K., inflation remains elevated, and the latest data is likely to confirm this, potentially impacting the Bank of England's rate decisions.
Gold and silver prices remain steady as traders await the U.S. employment situation report, which is expected to show an increase in non-farm payrolls. Asian and European stock markets are mixed, while U.S. stock indexes are set for a narrowly mixed opening. China's November exports slightly exceeded expectations, while imports fell slightly. The U.S. dollar index is lower, crude oil prices are firmer, and the yield on the benchmark U.S. Treasury 10-year note is at 4.151%. U.S. economic data to be released includes the weekly jobless claims report, Challenger job-cuts report, monthly wholesale trade, and consumer credit. Technically, gold and silver futures remain in an uptrend but show signs of exhaustion, with resistance and support levels identified.
The Euro has found some relief against the US Dollar, defending the psychological level of 1.0500 as the Greenback weakens. German inflation showed positive signs, but Eurozone economic sentiment continues to decline. US data, including jobless claims and GDP, remains resilient, but cracks are starting to show in the housing market. The focus now turns to the PCE data and EU inflation flash number, which could have a significant impact on the market. From a technical perspective, EUR/USD is showing mixed signals, with a potential bullish engulfing candle close but also a potential death cross forming. Retail traders are currently net-long on EUR/USD.
A former top executive at ByteDance, the parent company of TikTok, has alleged in a lawsuit that the Chinese Communist Party had "supreme access" to all data held by the company, including information stored in the US. The former head of engineering for ByteDance's US operations, Yintao "Roger" Yu, claimed he was fired after raising concerns about the company's actions. ByteDance dismissed the allegations as baseless. TikTok is currently trying to avoid a total ban in the US due to concerns about its impact on underage users and national security risks.
Most Asian stock markets were subdued on Friday due to concerns of a global slowdown after soft economic data from the US and China. The dollar held onto its gains from safe-haven flows. Japanese shares outperformed, with the Nikkei climbing 0.9% to its highest level since November 2021. China's bluechips fell 1.1%, and Hong Kong stocks were down 0.7% on the day. Banking fears lingered with PacWest down 23%. The US Federal Deposit Insurance Corporation said big lenders would bear the cost of replenishing its deposit insurance fund caused by recent bank failures.
Investors are bracing for more turmoil in the banking sector after the collapse of two U.S. lenders earlier this month and last weekend’s forced takeover of troubled Credit Suisse by rival UBS and the writedown of some of its contingent convertible bonds. Upcoming U.S. data could show how much the market turmoil is making recession more likely. Eurozone inflation data and PMI data out of China will also be in focus.
