The dollar's consolidation took an unexpected turn late in the afternoon of Monday November 18. Despite the rise in US Treasuries yields to 4.45%, the market dynamics were far from straightforward. The US '10-year' bond deteriorated to 4.493%, and the '30-year' reached over 4.676%. However, a slight upturn began to influence the greenback, which saw a decline of -0.35% to 106.30 ('$-Index') and nearly 0.5% against the euro, moving from 1.0535 to 1.0593 around 1:30 p.m. (equivalent to -0.15%).The Dollar's Battle Against Major Currencies
The dollar showed resilience against the yen, gaining 0.25%, which was enough to counterbalance its -0.4% drop against the Swiss franc and sterling. It's interesting to note the strong advance of the Australian dollar, which increased by 0.7% against the greenback and 0.2% against the euro. Additionally, the Canadian dollar made a recovery, rising by 0.55% to 1.400.The Yuan's Neglected Performance
On Monday, the Yuan was the least noticed currency, experiencing a -1.1% decline against the euro, reaching 7.666. This corrects the Renminbi's +1.2% gain since last Wednesday. The market dynamics for the Yuan were relatively subdued during this period.Market Themes and Investor Concerns
The themes that have been occupying the markets are now well-known. On one hand, there is the effect of Trump's election, along with weak demand from China and diverse corporate comments on the third quarter. Investors are worried that the 'pro-business' yet protectionist approach towards China may lead to a resurgence of inflation. This could potentially cause the Fed to slow down its rate cuts or even refrain from cutting them at all on December 17/18. Currently, it's a situation with a 50/50 chance.The Support for the Pound
Finally, the pound is receiving support from British 'Gilts', whose yield has risen by +4.5 basis points to 4.518%. This indicates a certain level of stability and confidence in the pound's performance.Overall, the week ahead is expected to be relatively quiet, with few major indicators on the agenda. The main event will be the publication of the 'flash' European PMI indices on Friday. These indices will provide valuable insights into the economic health of the Eurozone and could potentially impact the currency markets further.Copyright (c) 2024 CercleFinance.com. All rights reserved.
