US equities had a strong finish last week, especially in the tech and retail sectors, leading to record highs for the S&P 500. However, the US dollar weakened as expectations of a December rate cut by the Federal Reserve increased. The focus for the upcoming week will be on US jobs data, which could impact the Fed’s decision and the performance of the US dollar.
The past week was characterized by geopolitical developments, with President Trump threatening tariffs on Mexico, Canada, and China. This had an impact on currencies like the Australian Dollar due to its trade relationship with China. Additionally, Israel and Hezbollah agreed to a ceasefire, which temporarily reduced the geopolitical risk premium on oil prices.
In terms of market performance, US equities saw strong gains, with the S&P 500 reaching record highs thanks to tech and retail stocks. Retail sales data on Black Friday also indicated a significant increase in online spending. The DXY struggled due to increased expectations of a December rate cut, leading to weakness in the USD.
Looking ahead, the Asia Pacific region will see important economic data releases, including PMI data in China and real cash earnings in Japan. In Australia, retail sales, GDP data, and trade balance data will be key indicators to watch.
In the US, the focus will be on the NFP data release on Friday, which could provide insights into the Fed’s decision regarding a rate cut in December. A strong NFP number could lead to US Dollar weakness. Europe and the UK, on the other hand, have fewer high-impact data releases, but a speech by ECB President Christine Lagarde could provide insight into potential rate cuts.
The chart of the week highlights GBP/USD, which has seen a shift in expectations regarding rate decisions by the BoE and the Fed. The currency pair is approaching key resistance levels, and the performance of the US Dollar next week will be crucial in determining its direction.
Overall, the upcoming week promises to be eventful in terms of economic data releases and central bank decisions, with potential implications for currency markets and equity indices. Traders and investors will be closely monitoring these developments to make informed decisions in the market.
