12/12/2024 Daily Reports
The U.S. dollar steadies after hitting a 2-week high, as markets brace for the Fed’s expected rate cut next week. Meanwhile, the Aussie jumps on upbeat jobs data, and all eyes are on the ECB’s big decision today. Is the dollar’s momentum fading? #Forex #Fed #ECB #Markets
The U.S. dollar traded in a narrow range on Thursday, holding onto recent gains after Treasury yields rose and November CPI data fueled expectations of a 25-basis-point rate cut by the Federal Reserve next week. Markets now see a 98.6% chance of the cut, but the Fed’s longer-term rate path remains uncertain.
The Australian dollar surged on stronger-than-expected employment data, while the euro held steady ahead of the European Central Bank’s policy decision, where a rate cut is widely expected. The dollar index dipped slightly to 106.53 but stayed near Wednesday’s two-week high of 106.81. Will disinflation concerns slow the pace of rate cuts in 2024?
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The European Central Bank (ECB) and Swiss National Bank (SNB) take center stage today with major rate cuts expected. The SNB may deliver a bold half-point cut, possibly reintroducing negative rates to weaken the strong franc, while the ECB is likely to trim by 0.25%, though whispers of a larger cut persist. Policymakers are caught between cooling inflation and a weakening eurozone economy.
Markets anticipate more ECB cuts well into 2025, with U.S. tariffs and political uncertainty in Europe adding pressure. Meanwhile, tame U.S. inflation data bolstered expectations for a Federal Reserve cut in December, fueling rallies across Wall Street and Asia, setting the stage for European market optimism.
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Oil steadied after a three-day gain as traders assessed US comments on potential tighter curbs on Russian and Iranian oil flows and awaited the International Energy Agency’s monthly outlook. Brent hovered around $74 a barrel, while WTI was above $70. US Treasury Secretary Janet Yellen suggested low oil prices could prompt more action against Russia, and Trump’s pick for national security adviser indicated increased pressure on Iran. Oil has traded in a narrow range recently, affected by geopolitical events and concerns over waning demand, especially from China, and rising supply, potentially leading to a glut next year. Oil also gained support from US inflation data, raising expectations for an interest rate cut.
