Daily market analysis

Forex Market Analysis: Market Wrap-Up and Global Currency Trends 3 December 2023

December 4, 2023

CURRENCIES:

  • Market Overview – Dec 3, 2023:
    • Volatility surged across various assets last week, leading to significant breakouts and breakdowns.
    • U.S. Treasury yields experienced a notable decline, with the 2-year yield dropping below its 200-day simple moving average to its lowest level since early June at 4.54%.
  • Equity Market Highlights:
    • Bullish sentiment on Wall Street, combined with falling U.S. bond yields, propelled the Dow Jones 30 above its July peak and near its all-time high.
    • The Nasdaq 100 also saw gains but faced resistance near 16,100, limiting its advance.
  • Foreign Exchange (FX) Developments:
    • USD/JPY experienced a 1.77% decline, breaking below its 100-day simple moving average – a bearish signal suggesting potential further losses.
    • EUR/USD remained relatively flat, impacted by lower-than-expected Eurozone inflation.
  • Market Outlook – Looking Ahead:
    • Continued shifts in U.S. interest rate expectations may exert downward pressure on U.S. yields, potentially weakening the dollar.
    • Risk assets and precious metals could find support into 2024 under this scenario.
    • Upcoming U.S. data, including ISM services PMI and non-farm payrolls (NFP), will be crucial for assessing the Fed’s monetary policy outlook.
    • Soft economic figures may reinforce dovish expectations, while strong numbers could lead to the reconsideration of rate-cut bets, potentially causing a reversal in recent market trends.
  • Future Guidance and Resources:
    • Traders seeking insights into gold’s future trajectory and upcoming market drivers can refer to the complimentary Q4 trading guide for valuable information.

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STOCK MARKET:

  • Earnings: GitLab (GTLB)
  • Economic data: Factory Orders, October (-2.7% expected, 2.8% previously); Durable Goods Orders, October final (-5.4% expected, -5.4% previously)
  • Stock Market Snapshot: November Gains and Labor Market Concerns:
  • November marked the best month for stocks this year.
  • Concerns arise about the rally’s sustainability pending the release of the crucial November jobs report.
  • Key Points for the Week:
  • Focus on economic data, including the jobs report, services sector updates, job openings, and consumer sentiment.
  • Federal Reserve enters a quiet period, and key earnings reports are anticipated.
  • November Performance Overview:
  • Gains in major indices: Nasdaq Composite, S&P 500, and Dow Jones Industrial Average.
  • Market cautious about potential labor market cooling and its impact on Fed rate hikes.
  • Anticipated Jobs Report and Market Sentiment:
  • Expecting 200,000 nonfarm payroll jobs added, with 3.9% unemployment.
  • Growing concerns about Fed’s interest rate trajectory and its implications for stocks.
  • Fed’s Remarks and Market Response:
  • Powell’s cautious remarks briefly surprised markets but ended positively.
  • Market now reflects a 64% chance of Fed rate cuts by March.
  • Jobs Report Importance and Market Trends:
  • Investors closely watching jobs report as a vital indicator.
  • Positive job market trends would support Fed’s goals.
  • Economic Data Driving Markets:
  • With Fed quiet, economic data becomes key.
  • Assessing risk appetite through reports on momentum trades like GameStop and C3.ai.
  • Analyst Perspective on Market Conditions:
  • Despite concerns, analysts see no alarming signs of overbought conditions in the current market environment.

COMMODITIES:

  • Precious Metals Performance:
  • Market dynamics favored precious metals, triggering a robust rally.
  • Gold spot prices surged by 3.5%, nearing the record zone near $2,075.
  • Silver gained 4.7%, closing at its highest level since May.

Styliana Charalambous
Market Analyst

My name is Styliana Charalambous, possessing a professional qualification as a Chartered Certified Accountant and a Bachelor’s Degree in Accounting and Finance. Highly motivated financial analyst with expertise in audit and investment strategies. I have several years of experience in the finance industry, as an audit supervisor at KPMG and the Head of Investment & Market Research in a multinational Fintech company.

Passionate about personal finance, investing, and creating finance content on social media. Lecturer in Accounting & Finance at Canterbury Christ Church University. I am the Founder and CEO of Selfmade Academy, an organization that helps thousands of students worldwide to plan for their financial future and make smart decisions about their money

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