Important calendar events
The dollar surged after the announcement of Trump’s victory in the U.S. presidential elections. The dollar index skyrocketed from 103.6 to 105.4 on Wednesday but pared some gains after the Fed rate decision on Thursday, finally closing near 104.9 on Friday. US treasury yields gained strength mid-week, with the US 10-year bond yield rising from 4.29 to 4.44%, then dropping to 4.31% at the end of the week.
The dollar was under pressure early last week due to the uncertainty surrounding the US Presidential elections. However, the dollar surged to a four-month high on Wednesday after the announcement of Donald Trump’s victory in the elections. Trump’s proposed tariffs and tax policies are expected to support economic growth, boosting the dollar. In addition, the import tariffs imposed are expected to drive inflation higher. This may force the Fed to keep interest rates at restrictive levels longer.
The US Federal Reserve cut interest rates by 25 basis points on Thursday to a target range of 4.50% to 4.75%. The Fed had already launched its easing cycle in September, with an aggressive 50-bp rate cut, signaling the end of its restrictive monetary policy. The dollar dipped after the Fed policy meeting, even though the rate cut had been fully priced in by markets. The dollar had surged to a multi-month high after the announcement of Trump’s victory on Wednesday and deflated on Thursday as many market participants rushed to realize their gains.
The Fed’s statement after the meeting was slightly dovish, expressing confidence that US inflation would gradually drop to the central bank’s 2% target. Fed Chair Jerome Powell stated that the progress of disinflation is steady, and the labor market is strong, permitting a shift towards a more neutral monetary policy. Odds of another rate cut in December are currently approximately 65%.
More importantly, Powell allayed fears that he would be forced to step down by Trump’s administration. Powell stressed that it is not permitted under the law for the US President to remove the Fed Chair, indicating that he intends to complete his term of office, until May 2026.
The US economy expanded by only 2.8% in the third quarter of 2024, after rising by 3.0% in the second quarter of the year and by 1.4% in the first quarter of the year, while markets were anticipating 3.0% growth in the third quarter of 2024. The US economy is suffering from prolonged tightening, raising recession concerns.
US inflation is proving to be sticky despite the Federal Reserve’s efforts to bring it down to its 2.0% target. Headline inflation cooled slightly to 2.4% in September from 2.5% in August against expectations of a drop to 2.3%. Monthly CPI rose by 0.3% in September, surpassing expectations of 0.2% growth. Annual core CPI, which excludes food and energy, rose to 3.3% in September from 3.2% in August. Monthly core CPI rose by 0.3% exceeding expectations of 0.2% growth.
This coming week we expect to see increased volatility in the price of the dollar as key economic data are scheduled to be released. Markets this week will focus on US Consumer Price Index (CPI) data coming up on Wednesday. Headline inflation in the US is expected to remain steady at 2.4% annually in October, resisting the Fed‘s efforts to bring it down. US Producer Price Index (PPI) data on Thursday, will provide a more complete picture of the US inflation outlook. Retail Sales data coming up on Friday are strong indicators of economic activity.
EUR/USD exhibited high volatility last week, plummeting from 1.091 to 1.068 after the announcement of the US election result on Wednesday. The currency rate climbed back to 1.082 after the Fed rate decision on Thursday, then dipped to 1.071 on Friday. If the EUR/USD pair declines, it may find support at 1.066, while resistance may be encountered near 1.108.
The Euro was under pressure last week due to political turmoil in Germany, which is the Eurozone’s leading economy. German Chancellor Olaf Scholz fired Finance Minister Christian Lindner, causing the collapse of the three-party coalition that was ruling Germany. The country will be headed towards elections and political instability is expected to cause volatility in the Euro in the coming months.
Final Services PMI data for the Euro Area released on Wednesday were optimistic but failed to provide support for the Euro. Final Services PMI for the Eurozone rose to 51.6 in October from 51.2 in September against 51.2 anticipated. The EU Services sector continues to expand at a more rapid pace, as evidenced by a rising print above the threshold of 50.0.
Final Manufacturing PMI data released on Monday for some of the EU’s leading economies and for the Eurozone as a whole, were in line with expectations. EU Final Manufacturing PMI rose marginally to 46.0 in October from 45.9 in September against expectations of 45.9 print. The manufacturing sector remains in contractionary territory, as evidenced by a print below the level of 50.0 which denotes industry expansion.
The ECB lowered its benchmark interest rate by 25 basis points in October, bringing its main refinancing rate to 3.40%. The ECB started its easing cycle in June, lowering interest rates by 25bps for the third time this year in October.
ECB President Christine Lagarde has stated that the decision to cut interest rates was unanimous, but did not commit to future rate cuts. Lagarde stressed that economic activity in the Eurozone is slowing down inducing the ECB to lower interest rates. She also stated that policymakers are confident that inflation will drop to the central bank’s 2% target in 2025 but stressed that there are both upside and downside risks to inflation.
Inflationary pressures in the Eurozone are not cooling as fast as expected. Eurozone inflation rose to 2.0% year-on-year in October from 1.7% in September, against expectations of 1.9%. Core CPI, which excludes food and energy, also came in higher than anticipated, remaining steady at 2.7% in October, against expectations of a 2.6% print.
Preliminary Flash GDP data for the third quarter of the year showed that the Eurozone economy expanded by 0.4% in Q3 of 2024, rising from 0.2% in Q2 against initial estimates of 0.2% growth. The Eurozone economy also expanded by 0.3% in the first quarter of 2024. The economic outlook of the EU remains fragile as prolonged tightening has brought the Euro area economy to the brink of recession.
GBP/USD moved with high volatility last week, as both the BOE and the Fed lowered interest rates. The currency rate seesawed from 1.303 to 1.284, finally ending the week near 1.291. If the GBP/USD rate goes up, it may encounter resistance near 1.310, while support may be found near 1.283.
The Sterling gained strength on Thursday after BOE policymakers voted to lower interest rates by 25 basis points. Monetary Policy Committee (MPC) members voted with a strong majority of 8-1 to cut rates to 4.75% on Thursday. Bank of England Governor Andrew Bailey stated after the meeting that the central bank intends to adopt a gradual approach to cutting interest rates. This would give policymakers time to assess the impact of the Government’s new budget on inflation.
Britain’s new Labour Government announced its first budget earlier this month, causing volatility in the price of the Sterling. UK Chancellor of the Exchequer Rachel Reeves revealed a 40 billion pound tax rise, which will be spent largely on the health and energy sectors.
Headline inflation in the UK dropped to 1.7% year-on-year in September from 2.2% in August against expectations of a print of 1.9%. Core annual inflation, which excludes food and energy, dropped to 3.2% in September from 3.6% in August against 3.4% anticipated. Inflation in the UK has cooled to its lowest level since April 2021 and may induce the BOE to start cutting interest rates more aggressively.
GDP data showed that the British economy grew unexpectedly in August. The UK economic outlook has improved as the British economy expanded by 0.2% in August after remaining stagnant in June and July. The British economy expanded by just 0.5% in the second quarter of the year, failing projections of 0.6% and following 0.7% growth in the first quarter of 2024.
GDP data are due on Friday and are expected to show that the British economy expanded by 0.2% in September, maintaining a steady expansion rate. Preliminary GDP data are also due on Friday and are expected to show that the British economy expanded by 0.2% in the third quarter of the year.
USD/JPY rose from 152.0 to 154.7 mid-week as the dollar dipped, then pared most of the week’s gains, dropping back to 152.6 on Friday. If the USD/JPY pair declines, it may find support at 147.3. If the pair climbs, it may find resistance at 155.0.
USD/JPY rose precariously close to the 155.0 level last week, which is considered a line in the sand for another intervention in support of the Yen. Japan’s Finance Minister Katsunobu Kato warned markets on Friday that Japan’s government is prepared to respond to excessive Forex moves against the Yen. Kato stresses that the Japanese government will monitor closely the impact of Trump’s policies on Japan’s economy. Incoming US President Donald Trump has promised in his presidential campaign to raise import tariffs by 10%, which will affect Japan’s exports to the US.
The BOJ maintained its current monetary policy guidelines steady and its interest rate at 0.25% at its latest policy meeting. The BOJ had pivoted to a more hawkish policy at its meeting in July, raising interest rates by 15 basis points, the BOJ’s largest rate hike since 2007. The BOJ had already hiked interest rates once more in March, ending its negative interest rate policy.
BOJ Governor Kazuo Ueda’s forward guidance was hawkish, boosting the Yen. Ueda hinted at another rate hike in the following months, if economic and inflationary conditions are met. Ueda emphasized, however, that the BOJ’s policy will be data-driven and stated that the central bank will scrutinize data before each policy meeting.
Inflation in Japan dropped to 2.4% year-on-year in September from 2.8% in August against expectations of a 2.3% print. BOJ Core CPI remained at 1.8% year-on-year in August, the same as in July. Annual Tokyo Core CPI fell to 1.8% in October from 2.0% in September, which was in line with expectations. Inflation in Japan remains weak lowering the odds of another BOJ rate hike this year.
Japan’s economy expanded by 0.7% in the second quarter of the year. The Japanese economy has started to expand, after shrinking by 0.5% in the first quarter of the year.
Gold prices sank from $2,740 to $2,650 per ounce after the announcement of Trump’s win on Wednesday. Gold prices pared some of the week’s losses after the Fed’s rate decision, finally ending the week at $2,680 per ounce. If gold prices rise, they may encounter resistance at $2,790 per ounce, while if gold prices decline, support may be encountered near $2,640 per ounce.
Uncertainty over the US presidential elections propelled gold prices to an all-time high of 2,700 per ounce earlier this month. Gold prices had been moving in overbought territory, however, and collapsed after the announcement of Donald Trump’s victory in the US Presidential elections on Wednesday. Markets are still digesting the implications of Trump’s victory, putting pressure on gold prices. Trump’s proposed tariffs and tax policies are expected to support economic growth, boosting the dollar and putting pressure on gold prices.
Gold prices have been typically directed by the dollar’s movement, as the competing gold typically loses appeal as an investment when the dollar rises. The dollar surged after the announcement of Trump’s victory in the U.S. presidential elections. The dollar index skyrocketed from 103.6 to 105.4 on Wednesday but pared some gains after the Fed rate decision on Thursday, finally closing near 104.9 on Friday. US treasury yields gained strength mid-week, with the US 10-year bond yield rising from 4.29 to 4.44%, then dropping to 4.31% at the end of the week.
The US Federal Reserve cut interest rates by 25 basis points on Thursday, to a target range of 4.50% to 4.75%. The Fed had already launched its easing cycle in September, with an aggressive 50-bp rate cut, signaling the end of its restrictive monetary policy. The dollar dipped after the Fed policy meeting, boosting gold prices.
Gold prices are also supported by expectations of further Fed rate cuts. The Fed’s statement after the meeting was slightly dovish, expressing confidence that US inflation would gradually drop to the central bank’s 2% target. Fed Chair Jerome Powell stated that the progress of disinflation is steady, and the labor market is strong, allowing for a shift towards a more neutral monetary policy. Odds of another rate cut in December are currently approximately 65%.
Geopolitical tensions raise the appeal of safe-haven assets propping up gold prices. Gold prices hit a new all-time high of $2,789 per ounce on Wednesday. The crisis in the Middle East is boosting demand for safe-haven assets, keeping gold prices high.
Oil prices gained strength after the announcement of the US election outcome last week but deflated later in the week. WTI price rose from $70.8 to 73.0 per barrel mid-week, but pared gains later in the week, dropping to 70.4 per barrel. If oil prices retreat, they may encounter support near $66.9 per barrel, while resistance may be found near $73.0 per barrel.
Oil prices exhibited high volatility after the announcement of the US election result on Wednesday, but steadied towards the end of the week, as markets had time to digest the US election outcome.
Hurricane Rafael was expected to hit the US Gulf region last week, disrupting oil supply. Over 23% of the US Gulf of Mexico's oil output was halted in anticipation of the hurricane, boosting oil prices. Concerns of prolonged disruptions in oil supply, however, receded, after the latest weather forecasts showed changes in the trajectory and intensity of the hurricane.
Oil prices are kept in check by high central banks’ interest rates. The US Federal Reserve cut interest rates by 25 basis points on Thursday, to a target range of 4.50% to 4.75%. The Fed had already launched its easing cycle in September, with an aggressive 50-bp rate cut, signaling the end of its restrictive monetary policy.
The Fed’s statement after the meeting was slightly dovish, expressing confidence that US inflation would gradually drop to the central bank’s 2% target. Fed Chair Jerome Powell stated that the progress of disinflation is steady, and the labor market is strong, permitting a shift towards a more neutral monetary policy. Odds of another rate cut in December are currently approximately 65%.
US crude oil inventories released on Wednesday showed a surprise build in US crude stockpiles, putting pressure on oil prices. The US Energy Information Administration reported that weekly crude stocks rose by 2.1M barrels for the week to November 1st, exceeding expectations of a build by 0.3M barrels and following a 0.5M barrels draw the week before.
The Organization of Petroleum Exporting Countries (OPEC) announced on Sunday that it would extend its output cuts of 2.2 million barrels per day into December. The organization had already delayed output rises in October due to low demand and weakening oil prices. Oil prices went up after OPEC’s announcement and continued to rise on Tuesday as markets had time to digest the news.
The ongoing crisis in the Middle East threatens to disrupt oil distribution. Concerns of a broadening conflict in the Middle East are boosting oil prices. The conflict between Israel and Hamas continues to escalate, threatening to affect oil supply and distribution.
Bitcoin price surged after the announcement of the outcome of the US Presidential elections and continued moving in an uptrend after the Fed voted to lower interest rates last week. Bitcoin price rose above the key $80,000 level and hit a new all-time high of $81,000. If the BTC price declines, support can be found at $65,000, while resistance may be encountered at the psychological level of $82,000.
Ethereum price also traded in an uptrend last week, rising above the key $3,000 level and touching $3,240 over the weekend. If Ethereum's price declines, it may encounter support near $2,360, while if it increases, resistance may be encountered near $3,300.
Crypto markets surged after the announcement of Donald Trump’s victory in the US Presidential elections. Trump’s proposed tariffs and tax policies will support economic growth, boosting high-risk assets, such as cryptocurrencies. In addition, Trump has openly declared his support of crypto markets, announcing that he will make the US ‘the crypto capital of the planet’.
Cryptocurrency prices are also affected by central banks’ interest rates. High interest rates are restricting economic growth, putting pressure on risk assets, while the promise of rate cuts boosts crypto markets. The US Federal Reserve cut interest rates by 25 basis points on Thursday, to a target range of 4.50% to 4.75%. The Fed had already launched its easing cycle in September, with an aggressive 50-bp rate cut, signaling the end of its restrictive monetary policy.
The Fed’s statement after the meeting was slightly dovish, expressing confidence that US inflation would gradually drop to the central bank’s 2% target. Fed Chair Jerome Powell stated that the progress of disinflation is steady, and the labor market is strong, permitting a shift towards a more neutral monetary policy. Odds of another rate cut in December are currently approximately 65%.
Concerns of a broadening conflict in the Middle East are promoting a risk aversion sentiment, lowering the appeal of high-risk assets such as cryptocurrencies. The conflict between Israel and Hamas continues to escalate, putting pressure on risk assets such as cryptocurrencies.
BTC/USD 1h Chart
ETH/USD 1h Chart
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Written by:
Myrsini Giannouli
présence dans l'industrie en tant que fournisseur de liquidités
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