Market Moves and Cease-Fire Cheers: A Weekly Rundown.
USD Struggles for Momentum Amid Thanksgiving Lull
The US Dollar Index (DXY) is facing challenges in sustaining its recent upward trend, possibly influenced by the Thanksgiving Holiday. Despite a two-day gain, concerns linger over weakening economic data, raising questions about the Federal Reserve’s stance. The recent rebound, supported by a drop in initial jobless claims, may bolster demand but poses a potential obstacle in the fight against inflation. With no major US data releases as the week concludes, the dollar could remain rangebound into the weekend.
GBP Rises as UK Economy Shows Signs of Recovery
The UK economy found stability in November, with the service sector ending a three-month decline and manufacturers scaling back production cutbacks. Relief from a pause in interest rate hikes and a slowdown in inflation supports business activity. Though concerns persist about future growth and inflation, Sterling traders responded positively, pushing GBP/USD to a new ten-week high. The Pound’s strength, rather than US dollar weakness, is currently driving the rally.
EUR Gains Ground Despite Mixed Eurozone Signals
The euro strengthened against the USD on Thanksgiving Day, buoyed by slight improvements in eurozone PMI data. The European Central Bank’s meeting accounts emphasized market uncertainty and data dependency for potential interest rate hikes. However, mixed signals from ECB officials add to the overall uncertainty. Germany’s negative GDP growth quarter raises concerns about a possible recession, impacting the larger eurozone. The day ahead includes key euro area data and ECB officials, with potential muted volatility due to the Thanksgiving hangover.
Cease-Fire Brings Hope Amid Israel-Hamas Conflict
A temporary cease-fire agreement aims to release hostages taken during Hamas’ raid on Israel, providing respite for war-weary Palestinians in Gaza. Brokered by Qatar, the US, and Egypt, the deal involves a four-day halt in hostilities and the release of 50 hostages in exchange for 150 Palestinian prisoners. The agreement, set after weeks of negotiations, could shape the course of the conflict triggered by Hamas’ Oct. 7 raid. The market impact remains uncertain, with a potentially muted effect due to the Thanksgiving holiday in the US.