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US dollar index remains strong, progress in Russia-Ukraine negotiations drags down oil prices
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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Market Analysis]: The U.S. dollar index remains strong, and the progress of Russia-Ukraine negotiations drags down oil prices." Hope this helps you! The original content is as follows:
On November 24, in early trading in the Asian market, spot gold was trading around US$4,040.90 per ounce. The price of gold finally stabilized after a volatile decline last Friday. Fed Williams said that the Federal Reserve can still cut interest rates in the "short term" without jeopardizing general policy. This statement provided support for bulls in the gold market; U.S. crude oil traded around $57.86 per barrel, continuing last week's decline. The United States is actively promoting Russia and Ukraine to reach a peace agreement, and the Ukrainian president may go to the United States to discuss the "28-point" new plan. The dollar strengthened to a six-month high, suppressing demand.
The U.S. dollar weakened against the yen on Friday, mainly as Japan's finance minister issued a strong warning about "excessive volatility" in the currency market and hinted at possible intervention, prompting traders to take profits on short yen positions. Despite this, the yen still fell by more than 1% last week due to the huge early decline last week.
In broader markets, the dollar's overall performance remained strong, with the dollar index hitting a five-and-a-half-month high and recording its largest weekly gain in six weeks. This strength is mainly due to the market's expected divergence in the policy path of the Federal Reserve and other major central banks, such as the Bank of Japan and the European Central Bank.
However, the dollar's gains were somewhat restrained on Friday. New York Fed President Williams made dovish remarks, saying the Fed could still cut interest rates "in the short term," rekindling market expectations for a December rate cut. According to interest rate futures market pricing, traders believe that the probability of a rate cut in December has risen sharply to 71% from 39% a day ago. This expectation limits further upside for the dollar.
In terms of other currencies, the euro and pound fell under pressure against the dollar. Weak Eurozone manufacturing data, as well as UK gains this weekThe poor economic performance ahead of the Budget has put pressure on their respective currencies. Overall, the foreign exchange market is being pulled by multiple forces: the threat of intervention by the Japanese authorities, repeated expectations of interest rate cuts by the Federal Reserve, and differences in the growth prospects of major global economies.
European Market
The UK’s preliminary PMI for November generally sent a pessimistic signal about the economic outlook. Manufacturing edged back into expansion territory, rising to 50.2 from 49.7 - the highest level in 14 months. But the improvement was overshadowed by a sharp decline in service sector activity, with the services PMI falling to 50.5 from 52.3, a seven-month low. As a result, the xmniubi.composite PMI fell significantly from 52.2 to 50.5.
The latest data shows the economy is "stalling," with job losses accelerating and business confidence deteriorating sharply, according to Chris Williamson of S&P Global Market Intelligence. The PMI data is roughly in line with GDP growth in November, which is only about 0.1% so far in the fourth quarter.
While part of the slowdown has been blamed on a pause in spending decisions ahead of the autumn budget, the weakening confidence suggests hesitation could "turn to the downside" as households and businesses brace for new "demand-suppressing measures".
The outlook for inflation has also softened significantly. Sales price inflation fell to its lowest point in nearly five years, xmniubi.commodity prices fell at the fastest pace since 2016, and services sector pricing power weakened.
UK retail sales experienced a strong downward impact in October, falling 1.1% month-on-month, far lower than the expected slight growth of 0.1%. It was the first monthly decline since May and reflected broad weakness among supermarkets, clothing and online retailers.
Some retailers believe consumers are intentionally delaying purchases in anticipation of Black Friday sales, further amplifying the pullback at a time when household budgets are still strained by high interest rates and inflation.
Despite the poor monthly data, retail sales increased 1.1% in the three months to October xmniubi.compared with the previous three months.
Business activity in the Eurozone weakened slightly in November, with the PMI xmniubi.composite index falling slightly to 52.4 from 52.5. The manufacturing index fell back to 49.7, below a five-month low of 50.0. The services sector edged up from 53.0 to an 18-month high of 53.1.
Cyrus de la Rubbia, chief economist of Hamburg xmniubi.commerzbank, pointed out that the manufacturing industry is still "trapped in a confused land in no man's land", with weak demand and another decline in new orders. He warned that the industry was still "months, even quarters" away from a sustained improvement, noting that conditions were deteriorating in Germany and France. In fact, the German manufacturing PMI fell from 49.6 to 48.4, and France fell from 48.8 to 47.8.
In contrast, the services sector still provides a much-needed buffer. Growth in Germany's services sector slowed (to 62.7 from 54.6) but remained solidly positive. France resumes expansion (50.8 from 48.0). As services take a greater weight in the euro area economy, the euro areaGrowth in the fourth quarter is still expected to be faster than in the third quarter.
U.S. market
New York Fed President John Williams maintained a cautiously dovish tone today, saying he still views U.S. monetary policy as "moderately restrictive." With that in mind, he believes "further adjustments are needed in the near term" to bring the federal funds rate closer to neutral.
Williams reiterated his belief that inflation will moderate as the impact of tariffs penetrates the economy without creating lasting price pressures. At the same time, he stressed that the labor market appeared to be cooling in a controlled manner.
He pointed out that the unemployment rate reached 4.4% in September, which was xmniubi.comparable to the normal level before the epidemic-when the job market was healthy but "not overheated."
U.S. business activity remained stable in November, with the PMI xmniubi.composite index rising slightly from 54.6 to 54.8. The manufacturing index fell to 51.9 from 52.5, while the service industry index rose to 55.0 from 54.8. According to S&P Global's Chris Williamson, the data shows the economy is "relatively active," with annualized GDP growth of about 2.5% so far in the fourth quarter, and that overall growth is "encouraging, broad-based and encouraging.
Business sentiment has also improved significantly, helped by expectations of further interest rate cuts from the Federal Reserve and relief from the reopening of the federal government. Williamson noted that optimism about the year ahead has increased as uncertainty about policy and political risks recedes. November Recruitment Hiring continues, although businesses remain cautious as tariffs and rising operating costs suppress labor demand.
Still, the PMI report highlighted some areas of concern. Manufacturers' new order growth slowed, while finished goods inventories hit a record high. Price pressures also accelerated at a faster pace, keeping the inflation debate within the Fed.
Canada's retail industry weakened in September, with overall sales falling 0.7% to 69.8 billion Canadian dollars. , in line with expectations. The decline was broad-based, led by auto and parts dealers. Excluding autos and gasoline, retail sales fell 0.8% month-on-month, clearly indicating a decline in real consumption.
On a quarterly basis, nominal retail sales rose 0.3%, indicating that inflation-adjusted spending remained stagnant in October. The forecast shows no substantial improvement, and retail sales are expected to be basically flat.
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