Markets are steady today ahead of a week that doesn’t include many key events, and two public holidays. Markets will be closed in Japan on Wednesday and US will be closed on Thursday (Thanksgiving). Wednesday will feature FOMC minutes and are expected to bring more insights as to the reasoning for the almost certain rate hike in December. Currently, probabilities for a rate hike are 95% for the December 14th decision. Donald Trump’s election has raised concerns over inflation and the need of Central Banks to act swiftly so as to contain it, in light of his plans to use fiscal policy to revive the economy (cut taxes, raise government spending).
Currencies: The USD continues to trade near 14 year highs. EURUSD lost 2.3 % last week, having touched a low 1.0568 with now critical support and March 2015 low of 1.0456 in sight. USDJPY also rose to 111.20, its highest since early June. The Dollar Index, has added 0.1% today after gaining as much as 4% last week which was its biggest weekly rise since March 2015.
Oil and Gold: Gold managed to rally shortly after today’s open to $1214 but fell back to $1210 later. Gold lost $27 last week, having previously shed $110 of its value the week before. The reason for Gold’s drop since Trump was elected is the fact that due to expectations of rising inflation stemming from his policies, the FED is now expected to proceed with a faster and more frequent path to raising rates so as to contain inflation. However, Fed chair Janet Yellen said on Thursday in congressional testimony that Trump’s election has done nothing to change the Fed’s plans for a rate increase “relatively soon”, so the market may be getting ahead of itself too soon. Oil prices rose more than 1% on expectation that OPEC moved closer to an output cut. BRT oil traded at $47.48 up 62 cents of 1.3$ while WTI was up 1.2% or 56 cents to $46.25.
Stocks: Asian stocks are trading mildly higher, as European indexes also opened higher as well. Last week US stocks retreated from near record levels to close lower on Friday as investors took profits from the recent rally. AS it is a holiday shortened week, trading volumes might not be as high as last week.