U.S. Flash Services & Manufacturing, UoM Consumer Sentiment & Inflation Expectations
The U.S. dollar gained against most major currencies on Thursday, with the dollar index (USDX ) up by 0.41% and crossing above its recently reached one year high. The US dollar strengthened on safe haven demand due to rising geopolitical tensions as well as strong data on US employment which indicates a slower course for the Fed in its rate cut path.
Gold prices appreciated in Asian trading on Friday, on track for a substantial weekly gain. This was mainly attributed to geopolitical tensions between Russia and Ukraine that have intensified, with Russia responding to the use of U.S. and British missiles by firing a new kind of hypersonic medium-range ballistic missile at a Ukrainian military facility. In recent statements, Putin said that the Ukraine war was escalating towards a global conflict after the United States and Britain allowed Ukraine to hit Russia with their weapons.
Wall Street sentiment was overall positive on Thursday, with the main stock indices gaining ground following strong performances from cyclical stocks such as financials and industrials. However, the tech sector underperformed, with Google leading the decline amid regulatory concerns. Alphabet Inc Class A fell more than 4% as the Department of Justice late Wednesday demanded Google sells its Chrome web browser as part of series of remedies to cut the tech giant's monopoly in online serach. Nvidia shares closed with a small gain after the tech giant reported better-than-expected third-quarter results. However, its fourth-quarter revenue guidance fell short of some analysts' expectations, who had hoped for a more significant beat.
On the cryptos front, Bitcoin broke its all-time high once again late on Thursday, reaching levels right above the $99K mark. Reports suggest that Bitcoin's recent price surge was fuelled by anticipation of a second regulatory measure that would be more favorable to the cryptocurrency industry as well as news regarding a launch of options tracking Blackrock’s iShares Bitcoin Trust exchange-traded fund, with traders seen piling into call options on the crypto. Overall crypto market capitalization rose to $3.43 trillion from $3.32 trillion seen on Thursday.
For Friday, markets will most likely be focusing on flash manufacturing and services data from the eurozone, the US and the UK, monthly retail sales from Canada and a speech by ECB president Lagarde. Later in the day some price action could be seen upon the release of consumer sentiment and inflation expectations by the University of Michigan.
EUR/USD
The EUR/USD pair extended its decline on Thursday, dropping to its lowest levels since November 2023.
Markets are closely watching Europe’s HCOB Purchasing Managers Index (PMI) data for November, set to release early in the European trading session. Expectations indicate little change, with the Pan-European Manufacturing PMI projected to remain at a contractionary 46.0. Meanwhile, the Services PMI component is forecast to edge slightly higher, from 51.6 to 51.8.
On the US side, attention turns to Friday’s PMI releases. Median forecasts suggest an uptick in economic activity, with November’s US Manufacturing PMI anticipated to rise from 48.5 to 48.8. The Services PMI is also expected to increase, climbing to 55.3 from 55.0.
Gold
Gold prices advanced for a fourth consecutive session on Thursday, as geopolitical risks continue to drive safe-haven demand.
Heightened fears over the Russia-Ukraine conflict fueled the rally in gold prices. Reports initially suggested that Russia may have launched an Inter-Continental Ballistic Missile (ICBM) on Ukraine, further escalating regional tensions. However, Reuters, citing a Western official, clarified that an ICBM was not deployed on Thursday.
Looking ahead, traders will monitor upcoming speeches from Fed officials and the University of Michigan (UoM) Consumer Sentiment data for further market cues.
WTI Oil
Oil prices rose Thursday, heading for a positive week as escalating tensions between Russia and Ukraine prompted traders to price in a higher risk premium for crude. Supply disruptions in Norway, a temporary pullback in the US Dollar, and speculation around OPEC+ production decisions also contributed to the week’s gains.
Rising tensions between Russia and Ukraine were a major factor in crude’s rally this week. Markets are increasingly concerned that Ukraine could target Russian energy infrastructure, disrupting oil production and tightening global supplies.
Oil prices remain buoyed by geopolitical risks and the possibility of supply constraints, though demand concerns, particularly in China, continue to cast a shadow over the broader market.
US 500
U.S. stock indexes ended Thursday’s session on a positive note after a day of volatile trading, with the US 30 and the US 500 reaching their highest levels in a week.
Nvidia, Wall Street’s largest company by market cap, added 0.67% following its highly anticipated earnings report. The chipmaker surpassed quarterly expectations and offered an optimistic fourth-quarter revenue outlook. However, some investors were underwhelmed by the pace of projected growth, which marked Nvidia’s slowest in seven quarters.
A weekly report on jobless claims showed an unexpected decline, hinting at a potential rebound in November’s job growth.
Market participants are now turning their focus to the Federal Reserve, with attention on any statements ahead of the mid-December Federal Open Market Committee (FOMC) meeting.
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