Global Market Snapshot 4th November 2024

This week’s focus in the forex market is primarily on the strong rebound of the US dollar, the corrective decline of the Japanese yen, and signs of a rebound in the British pound. The market is closely watching the upcoming US presidential election and the Federal Reserve policy meeting, both of which are expected to have a significant impact on the major currency movements. 

The exchange rate of the US dollar against the euro and other major currencies has rebounded, partly benefiting from weakened US labor market data due to the impact of hurricanes and strikes. However, despite the slowdown in employment growth, the US unemployment rate remains steady at 4.1%. Consequently, the market anticipates that the Federal Reserve will cut interest rates by 25 basis points at its meeting on November 7, with Fed-linked futures trading showing a nearly 99% probability of a rate cut. Investors are also closely watching the US presidential election on November 5. This election is expected to significantly impact the dollar’s trajectory, with speculation that any delay in announcing the results could increase volatility in the forex market. 

USDJPY This week, the US dollar rose against the Japanese yen for three consecutive days, reaching 151.84 and ending a previous three-day decline. Following the policy meeting on last Thursday, the Bank of Japan’s governor announced the continuation of the current monetary policy, which briefly boosted the yen. However, as investors anticipate a potential policy adjustment by the Bank of Japan in December, the market remains bearish on the yen’s outlook. 

GBPUSD This week, the British pound ended its five-week losing streak against the US dollar, rising 0.28% to 1.2992 USD. The UK government’s newly announced tax and spending budget has sparked market concerns over a resurgence in UK inflation. On Friday, short-term borrowing costs for the pound saw their largest weekly increase in over a year, indicating that inflation concerns may impact the pound’s long-term trajectory.  

EURUSD Against the backdrop of a rebounding US dollar, the euro fell by 0.3% against the dollar this week, closing at 1.088 USD. Although economic data from the eurozone has been relatively stable, the euro continues to face downward pressure from the dollar’s strength. The market holds a wait-and-see stance regarding the European Central Bank’s future monetary policy, especially given the ECB’s more cautious approach compared to the Federal Reserve’s rate cut expectations. 

USDCAD This week, the Canadian dollar’s performance against the US dollar was influenced by fluctuations in oil prices, as Canada’s crude oil exports typically have a direct impact on the CAD exchange rate. However, due to economic policy differences between the US and Canada, the CAD is under pressure and has shown relative weakness amidst a strengthening US dollar. Although the rebound in Canadian oil prices provides some support to the CAD, the economic disparity with the US continues to weigh on its trajectory. Going forward, the CAD’s performance will likely be more influenced by global oil price volatility and Canada’s domestic economic data. 

BTC Bitcoin experienced volatile trading over the weekend, briefly dipping below $69,000, as polls indicated a narrowing lead for pro-Bitcoin presidential candidate Donald Trump.