Daily market commentary: The US dollar index loses over 5% in November


The greenback is losing ground to its peers as we approach the end of the week. The US dollar index, which measures the performance of the American currency versus a basket of other majors, lost more than 5% in November. This loss happened as the markets reacted to changing circumstances. On the one hand, risk appetite improved, weighing on the haven dollar. Energy prices eased from the maximums reached over the summer, and hopes grew of a Chinese volte-face in relation to its strict Covid-zero policy. But perhaps more importantly, there is a growing consensus in the markets that the Federal Reserve will not go quite as far in its rate hiking cycle as previously expected.

This sentiment found even more traction yesterday, with Jerome Powell saying in a speech that the slowdown in rate hikes is likely to start in December. These comments by the chairman of the Fed were more dovish than expected, and accentuated the ongoing dollar weakness.

Ricardo Evangelista – Senior Analyst, ActivTrades

Daily Market Commentary

European Shares

European markets continued to climb on Thursday, extending gains registered by Asian shares overnight, as investors continue to cheer on major narrative changes.

Risk appetite stays on the rise this week after investors witnessed Fed chairman Jerome Powell confirm a slowdown in further rate hikes, and stating an economic “soft landing” was becoming more likely in the US. Most traders are now starting to price-in a 50bp rate hike in December while some even talk about a potential pivot in early 2023, which would significantly support market sentiment towards riskier assets if proven to be true. Elsewhere, investors also welcomed the change in tone from China on its covid policy, as Beijing looks set to ease restrictions in the country, boosting risk appetite towards shares that can now be purchased at a much-discounted price following this year’s sell-off.

Today will be a busy trading session on the macro front, with traders patiently waiting for major economic data from the US such as the PCE Price Index, Initial Jobless Claims and ISM Manufacturing PMI.

The STOXX-50 index still trades inside its short-term bullish channel despite a trend slowdown highlighted by a bearish divergence between prices and the RSI indicator.

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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