Amidst the US equity market surge, the US dollar continues to face challenges while the British pound and Euro experience a high. Gold’s failure to surpass the $2000 mark raises concerns for the future.
Monday, November 27 – US equity markets continue to surge to fresh multi-month highs in the upcoming week, signalling a prevailing risk-on sentiment. The VIX ‘fear gauge’ is at its lowest since the beginning of 2020, dropping over 46% from its late-October peak. The belief that global interest rates have peaked fosters optimism, and with anticipated rate cuts by Q2 2024, the upward trend may persist.
The US dollar remains under pressure, approaching a new multi-month low despite slightly higher US Treasury yields. The market anticipates higher yields as a significant sale of two-year, five-year, and seven-year US treasuries looms, totalling $148 billion.
In the British pound’s weekly forecast, it has reached highs not seen since early September against the US dollar. The pound appears surprisingly comfortable above $1.25, supported by monetary measures and positive economic data.
Gold and silver prices experienced a positive week, supported by a weakened US dollar. While both metals faced a potential selloff, buyers kept prices stable. However, gold’s failure to break the $2,000/oz mark may pose a vulnerability in the coming week.
Despite a relatively quiet week in FX markets, the Euro edged higher against the US dollar and faced challenges against the British pound. The US dollar forecast suggests a continued decline, mirroring US yields and economic data trends. The world’s largest economy is grappling with the effects of tight financial conditions.
The market awaits high-impact economic data releases, including the 2nd look at US GDP and Euro Area and US inflation. Federal Reserve Chair Jerome Powell’s speech at the week’s end will likely be a focal point for investors. Stay tuned for potential market shifts and developments.