Last Week Review:

The "Trump trade" continued last week as U.S. inflation data met expectations and Federal Reserve officials made frequent hawkish remarks. Fed Chair Jerome Powell emphasized the strong economy, hinting at a pause in rate cuts. The dollar and U.S. Treasury yields rose, gold prices fell, and non-U.S. currencies were under pressure. As the post-election rebound momentum waned, stock markets dropped sharply before the weekend. The massive boost to Wall Street from the Fed’s rate cuts was gradually digested. Bitcoin remained above $90,000, significantly outperforming gold last week, as billionaire Elon Musk joined the U.S. government’s efficiency department, further fueling "Trump trade" sentiment. Powell reiterated a reluctance to cut rates further, while the CPI and retail sales data supported a strong dollar, closing slightly below 107.00 and suppressing precious metal buying.

As the post-election rebound momentum weakened, stock markets fell sharply before the weekend (November 15). The massive boost to Wall Street from Donald Trump's victory and Fed rate cuts was fading. The Dow Jones Industrial Average dropped 305.87 points, or 0.70%, to close at 43,444.99; the S&P 500 fell 1.33%, closing at 5,870.62; and the Nasdaq Composite lost 2.24%, ending at 18,680.12.

Gold prices declined steadily last week, with spot gold closing at around $2,565.50 per ounce, down more than 4.5% from the start of the week, marking its largest weekly drop in three years. Market sentiment was weighed down by cooling Fed rate cut expectations, a strong dollar, and better-than-expected U.S. economic data, leaving traders cautious about the future direction of gold prices.

Silver prices also saw consecutive declines last week, briefly falling below $30.00 to a near two-month low of around $29.680 mid-week. Reduced demand for safe-haven assets has pressured the precious metals sector, including silver. As the market evaluates the potential fiscal and monetary policy impacts of U.S. President-elect Trump, traders increasingly favor riskier assets.

The forex market experienced sharp fluctuations last week, driven by multiple factors. Forex markets reflected diverging policies and fundamentals among major economies. Strong U.S. data and upward revisions to policy expectations boosted the Dollar Index to its highest weekly gain since September, peaking at 107.07. Non-U.S. currencies faced widespread pressure, with both the euro and the pound declining, reflecting differing economic fundamentals and policy expectations. The market’s focus was on the Fed’s policy trajectory, surprising economic data, and reassessments of future monetary policy paths. As the December Fed meeting approaches, debates over rate cuts are likely to intensify, increasing forex market volatility.

International crude oil prices plunged last week. Brent crude futures fell $1.52, or 2.09%, to $71.04 per barrel, while U.S. WTI crude futures dropped $1.68, or 2.45%, to $67.02 per barrel. Spot WTI crude fell 4.68% for the week, closing at $66.90. Weekly declines for the two benchmarks were 4% and 5%, respectively, marking the largest weekly drop in a month. Concerns over the global economic outlook intensified, particularly signs of weakening demand, coupled with strong U.S. economic data, further complicating the Fed’s rate cut trajectory for December.

Bitcoin remained above $90,000 last week, significantly outperforming gold amid strong gains. Billionaire Elon Musk joined the U.S. government’s efficiency department, reigniting "Trump trade" momentum. Fed Chair Powell expressed no urgency for further rate cuts, and the CPI and retail sales data supported a strong dollar, closing just below 107.00, limiting precious metal demand.

U.S. bond markets saw mixed movements in Treasury yields following several economic reports. The 10-year Treasury yield fell from 4.44% late Thursday to 4.42%, while the 2-year yield, which is more sensitive to Fed policy expectations, dropped from 4.36% to 4.29%. Earlier this month, the Fed implemented its second rate cut of the year, and previous Fed forecasts suggest further rate cuts may occur by 2025.

This Week’s Outlook:

With the U.S. election dust settling, we look ahead to what this week may bring to the markets. On the monetary policy front, several central bank policymakers are scheduled to speak. The Reserve Bank of Australia will release its November meeting minutes on Tuesday, while China’s central bank announces its rate decision on Wednesday, and Turkey’s central bank follows with its own rate decision on Thursday. On the economic data side, we kick off Monday with Japan’s September machinery orders and October chain store sales figures, followed by Canada’s October housing data. Tuesday will feature CPI data for the Eurozone and Canada for October. On Wednesday, Japanese trade data and UK CPI data (both for October) are expected. Thursday brings Norway’s Q3 GDP, the UK’s November CBI trends for industrial orders, U.S. weekly initial jobless claims, and the Philadelphia Fed Business Index. The Eurozone’s preliminary consumer confidence reading for November is also due. On Friday, November PMI data will be released for Australia, Japan, France, Germany, the Eurozone, the UK, and the U.S. Other key releases include Japan’s October CPI, UK October retail sales, Canada’s September retail sales, and the University of Michigan’s November consumer sentiment index.

Key Focus Areas for the Week:

1. Trump Trade Developments:
   The evolution of Trump trade remains in focus as he officially takes office on January 20, 2025. Current market sentiment revolves around speculations regarding his policies. Every announcement, speech, or appointment could trigger market volatility. Expectations of tariff policies could be unfavorable for non-U.S. economies. Watch for profit-taking pressures if there’s no fresh news, discrepancies between announcements and past remarks, or contradictory authoritative comments.

2. U.S. Treasury Yields and Dollar Trends:
   This week’s long-term Treasury auctions will be critical. Higher Treasury yields based on Trump expectations could put upward pressure on the dollar, which could weigh on gold and non-U.S. currencies.

3. International Conferences:
   Key events include the ECB annual meeting, where European policymakers outline their strategies. Markets will focus on ECB rate cuts and insights on Europe’s economic outlook, particularly concerning Trump’s return.

4. Central Bank Policies and Capital Flows:
   While the Fed may pause rate cuts, other non-U.S. central banks could continue easing policies, directing funds toward the dollar and pressuring non-U.S. currencies.

5. Non-U.S. Currencies:
   The yen could depreciate further if Japan’s officials reiterate their opposition to rate hikes. Watch for interventions or statements near the critical 157 level. The wide U.S.-Japan rate differential supports a yen depreciation trend.

6. Non-U.S. Economic Data:
   Key inflation and employment data from non-U.S. economies are in focus. Important UK data releases could drive significant volatility for the pound.

Key Events and Economic Data This Week (Beijing Time):

• Key Events:

  • Monday (Nov 18): BoJ Governor Kazuo Ueda speaks; G20 Summit (Nov 18-19).
  • Tuesday (Nov 19): RBA releases November monetary policy meeting minutes.
  • Wednesday (Nov 20): ECB President Lagarde delivers opening remarks at the ECB Financial Stability and Macroprudential Policy Conference.
  • Thursday (Nov 21): RBA Governor Michele Bullock speaks.
  • Friday (Nov 22): ECB President Lagarde speaks at the European Banking Congress; SNB Chairman Schlegel speaks.

• Key Economic Data:

  • Monday (Nov 18): Eurozone September trade balance; U.S. November NAHB housing market index.
  • Tuesday (Nov 19): Eurozone October HICP YoY final; U.S. October building permits; Canada October CPI.
  • Wednesday (Nov 20): Japan October trade balance; UK October CPI and retail sales data; U.S. weekly EIA crude inventory changes.
  • Thursday (Nov 21): U.S. initial jobless claims; Philadelphia Fed manufacturing index; Eurozone November consumer confidence.
  • Friday (Nov 22): November PMI data for various countries; Japan October CPI; UK November GfK consumer confidence; UK October retail sales; Canada September retail sales; U.S. Michigan consumer sentiment index final.
    
    
    
    

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