Donald Trump's stellar victory in the US election boosted the US Dollar and equities, as markets embraced his "Make America Great Again" (MAGA) plan and anticipated fewer rate cuts from the Federal Reserve (Fed).
While the US dollar surged, stocks in Asia-Pacific dipped due to concerns over escalating US-China trade tensions. However, stronger-than-expected Chinese export data helped stabilize the Greenback, allowing currencies like the Australian, New Zealand, and Canadian dollars to recover some losses.
Meanwhile, the EURUSD struggled, with the ECB's rate cut stance and weak European data weighing on the pair. The USDJPY pulled back from a 14-week high, and GBPUSD rebounded from a three-month low as traders await key policy decisions from the Bank of England (BoE) and the Federal Reserve.
Prices of Gold and Crude Oil dropped before posting a corrective bounce as markets brace for this week’s key data/events after witnessing a surprise from the US elections.
EURUSD’s lack of recovery may be due to trader jitters ahead of key German Industrial Production and Eurozone Retail Sales data for September. Additionally, pessimistic statements from German Chancellor Scholz also exert downside pressure on the Euro pair.
Meanwhile, the recent dip in USDJPY is linked to speculation about potential Japanese market intervention to defend the Yen, along with expectations of higher wage growth in 2025, which could push the Bank of Japan (BoJ) towards more rate hikes.
GBPUSD saw its biggest drop since March 2023, pressured by a stronger US Dollar and market concerns over the UK budget amid mixed data. The Pound also faces pressure from speculation that the Bank of England may struggle to maintain its hawkish stance and could be forced into significant rate cuts due to economic challenges.
The AUDUSD recovery from a 13-week low faces hurdles from a stronger US Dollar, concerns over China, and disappointing Australian trade data for September. Similarly, NZDUSD has reversed from its lowest point since early August, due to stronger China trade data. Meanwhile, downbeat comments from Bank of Canada’s Carolyn Rogers and a slump in Crude Oil prices, amid a stronger USD and rising inventories, have pushed USDCAD higher.
Crude Oil prices fell modestly despite a stronger US Dollar and a large build in US oil inventories, likely due to Middle East tensions and speculation about a delay in OPEC+ supply increases.
Gold, on the other hand, dropped sharply—its biggest decline since June—breaking key support before bouncing off the 50-day EMA. While the US Dollar’s strength initially weighed on gold, the rebound suggests a rush for safe-haven assets amid ongoing market uncertainty.
Bitcoin (BTCUSD) hit a new all-time high, while Ethereum (ETHUSD) reached a three-month peak following Donald Trump’s victory. Crypto traders are optimistic, seeing fewer hurdles for the industry with Trump’s arrival.
Today’s key events include monetary policy announcements from the BoE and Fed, along with Trump’s pick for US Treasury Secretary, which will shape his influence on the markets. Additionally, German Industrial Production and Eurozone Retail Sales for September will keep traders on edge.
Both the BoE and Fed are expected to announce 0.25% rate cuts, aiming to reassure markets of a cautious approach. However, the Fed is likely to have more success in supporting the US Dollar, while the BoE may struggle to convince GBPUSD buyers. The Fed's reluctance for further cuts could boost optimism around the US economy and the Dollar, putting additional pressure on Gold and EURUSD.
May the trading luck be with you!
