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Weekly Market Preview
Friday, Dec 01, 2023
The US dollar experienced a decline last week as the market concluded that the Federal Reserve has reached the end of its interest rate hike cycle due to the downturn in economic activity. This downturn was evident in the US jobs data for October, followed by a decrease in inflation levels for the same month. This viewpoint was supported by statements from some Federal Reserve members, acknowledging a reduced need for interest rate hikes in the December meeting.
Consequently, investors anticipate the Federal Reserve’s next move in the upcoming year to involve interest rate cuts. Markets have priced in a 25-basis point rate cut in May 2024 and at least 100 basis points by the end of the next year. This shift contributed to gold prices reaching their highest levels in several months, surpassing the $2050 per ounce threshold.
In the current week, the markets are eagerly awaiting key data releases, with a focus on US jobs data for November. Projections suggest an addition of 175,000 jobs this month, with unemployment levels stabilizing at 3.9%. Any lower-than-expected data may increase risk appetite in the markets, potentially driving investors to price in further interest rate cuts. This, in turn, could lead to a continued decline in the value of the US dollar and an increase in commodity prices, particularly gold and silver.
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