Global Market Snapshot 18th November 2024

This week, the foreign exchange market experienced significant volatility driven by multiple factors. The US Dollar Index surged strongly, marking its largest weekly gain since September, while the euro and the pound declined, reflecting differences in economic fundamentals and policy expectations among various economies.

The US Dollar Index rose approximately 1.65% this week, closing at 106.68. The primary driver behind the dollar’s strength was Federal Reserve Chair Jerome Powell’s remarks, in which he explicitly stated that the Fed is in no rush to cut interest rates as inflation remains above target, leaving room for future policy adjustments. Additionally, US retail sales for October grew by 0.4% month-on-month, exceeding market expectations and indicating stronger-than-anticipated consumer spending resilience. In the short term, the dollar’s trajectory will remain influenced by economic data and policy expectations. If future data continues to confirm the relative strength of the US economy, the Dollar Index could advance further toward 107.50.

USDJPY The US dollar rose against the Japanese yen this week, breaking above the 156 level to reach its highest point in nearly four months. It ended the week at 154.745. The Federal Reserve’s firm stance contrasted sharply with the Bank of Japan’s dovish tone, driving the yen further downward. Although the recent strength of the dollar has suppressed the yen, analysts warn that the yen’s oversold condition may trigger a short-term technical rebound. If expectations for Federal Reserve policy shift or geopolitical risks intensify, the yen could see a corrective rise. However, in the medium term, widening interest rate differentials remain the key factor influencing the yen’s trajectory.

EURUSD The euro fell to 1.0538 against the US dollar this week, marking its second consecutive week of decline. The market refocused on the contrast between the eurozone’s sluggish economic performance and the relative strength of the US economy. Although the European Central Bank held rates steady earlier this month, declining inflation pressures and slowing economic growth have further dampened expectations for supportive eurozone policies. On the technical side, the euro has some support around the 1.0500 level, but a break below this could see it slide further toward the 1.0450 area. While Powell’s hawkish remarks played a role, the euro’s weakness is primarily driven by its fundamental fragility. Unless eurozone economic data delivers positive surprises, it is unlikely to attract significant bullish interest.

GBPUSD The British pound fell 2.4% against the US dollar this week, closing at 1.2620, marking its largest weekly drop since January 2023. Data released this week showed an unexpected contraction in the UK economy in September and further slowing of growth in the third quarter, undermining market confidence in the UK’s economic recovery. The economic slowdown in the UK contrasts sharply with the Federal Reserve’s relatively tight monetary policy, putting pressure on the pound. On the technical front, 1.2600 is a critical support level; if it is consistently breached, bears may target the 1.2500 area.

USDCAD The Canadian dollar showed limited movement against the US dollar this week, with USD/CAD trading around 1.40. While domestic economic data in Canada remained relatively stable, declining oil prices weighed on the Canadian dollar. Eased concerns over the Middle East situation, along with the US Federal Reserve’s cautious stance on rate cuts, pressured commodity prices, preventing the Canadian dollar from continuing its previous rebound. The future trajectory of the Canadian dollar will depend on developments in the oil market and the Bank of Canada’s policy direction. If oil prices decline further, USD/CAD could test the psychological level of 1.3800.

BTC Bitcoin rebounded over 3% to levels above $91,000.