Daily market commentary: The greenback is under pressure, devaluing 5% in relation to a basket of other major currencies

Forex

The US dollar index touched the lowest level since June, during early Monday trading. The greenback has been under pressure, devaluing 5% in relation to a basket of other major currencies during the month on November.  With risk appetite improving in global markets, following the relaxation of Covid-control measures in several Chinese cities, the dollar’s haven appeal is diminishing. At the same time, there are growing expectations that the Fed will moderate the pace of its rate hiking cycle. After four consecutive hikes of 75 basis points, the US central bank started to telegraph its intention to take the foot off the accelerator, with December’s decision expected to be of 50 basis points. Against this background, and with other major central banks behind in the tightening cycle, there may be scope for further dollar weakness.

Ricardo Evangelista – Senior Analyst, ActivTrades

Daily Market Commentary

European Shares

European stocks traded sideways at the beginning of the new trading week, while Asian shares closed higher overnight, as positive sentiment prevailed following reassuring developments in China.

Risk appetite is on the rise on Monday and investors are driving equities and commodity-related markets higher after Beijing increased the prospect of higher demand from China, following new steps towards economic reopening after easing testing requirements in a number of regions.

Elsewhere, investors have welcomed the latest US NFP report which topped estimates and clearly paved the way for a “soft-landing” and a slower pace of rate hikes from the Fed. That said, even if a 50bp hike is now widely expected for the December meeting, traders are now trying to assess where rates will be sitting at the end of the tightening curve.

However, despite the positive picture described above, the Euro is on the rise this morning alongside EU bond yields, which doesn’t usually provide an encouraging set-up for riskier assets. More market volatility may be registered in the afternoon as traders patiently wait for the US non-manufacturing PMI data.

Pierre Veyret– Technical analyst, ActivTrades 


Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.

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