The US dollar strengthens as risk aversion rises, while Eurozone economic data is mixed and gold prices consolidate amid uncertain Fed policy and geopolitical tensions.
- Dollar strength and risk aversion
The US dollar has seen renewed strength, mainly fueled by a risk-averse sentiment prevailing in global markets. Geopolitical tensions, such as political unrest in France and South Korea, have further fueled this risk aversion. As investors seek safe-haven assets, the U.S. dollar, often considered a safe-haven currency, has benefited from increased demand. This trend had a negative impact on the EUR/USD pair, as the Euro weakened against the strong US Dollar.
- Economic indicators and central bank sentiment
Eurozone economic indicators showed mixed results. While some data points, such as the PMI and PPI, suggest a stabilization of the region’s economy, overall sentiment remains cautious. Investors are closely monitoring the statements and actions of central banks, particularly the European Central Bank (ECB) and the Federal Reserve (Fed). Any indication of more aggressive or accommodative monetary policy can have a significant impact on the EUR/USD pair. The recent ADP US jobs report, which showed a slowdown in job growth, has raised questions about the future direction of Fed policy and its potential impact on the US dollar.
- Gold Analysis
Gold prices have consolidated in a tight range, with recent flows suggesting the potential for significant selloffs in the near future. Macro funds reaccumulated positions in gold, despite the Fed’s changing policy outlook. This could leave gold vulnerable to downward pressure, especially ahead of key economic events like the Fed Chairman’s speech and the NFP report. The recent decline in the ISM Services PMI, which fell below expectations, could also weigh on gold prices. However, geopolitical tensions and concerns over inflation could provide some support for the precious metal.
Main economic events of the week:
- December 4, 1:30 p.m. – Speech by ECB President Christine Lagarde: Central bank speeches often influence markets, and Lagarde’s comments on monetary policy, inflation and the economic outlook will be closely watched.
- December 4, 6:45 p.m. – Speech by Fed Chairman Powell: As head of the world’s most influential central bank, Powell’s remarks on interest rates, inflation and economic growth will have a significant impact on global markets.
- December 5, 1:30 p.m. – United States: non-agricultural wages: This is a key indicator of the health of the U.S. labor market. Strong job growth can be a sign of economic strength, while weak numbers can raise concerns about a possible slowdown.
- December 6, 10:00 a.m. – Eurozone GDP: Eurozone GDP figures will provide insight into the region’s economic performance. A high number could boost the euro, while a low number could weigh it down.
- December 6, 1:30 p.m. – United States: non-agricultural wages: This is another crucial economic indicator that can have a significant impact on the US dollar and global markets.
- December 4, 3:00 p.m. – ISM Services PMI: This index measures the health of the U.S. service sector, which represents a significant portion of the U.S. economy. A positive index can boost the US dollar.
- December 4, 9:00 a.m. – Speech by Governor Bailey of the BoE: Bailey’s comments on the UK’s economic outlook and monetary policy may impact the British pound.
- December 4, 1:45 a.m. – Caixin Services PMI: This index provides information on the health of China’s services sector, essential to global economic growth.
- 4 December 12 04:2024 – Australian GDP: Australia’s GDP figures can influence the Australian dollar.
- December 5 05/12/2024 12:30 a.m. – Australian trade balance: Australia’s trade balance can also have an impact on the Australian dollar.
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