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Global Markets: Dollar Falls, Gold Trends, and Oil in Focus

Dollar falls gold trends

Stay informed on global markets: Dollar falls, gold trends, central bank decisions, and more—your daily financial insights.

The Chicago Purchasing Managers’ Index (PMI) witnessed an unexpected surge in November, but the optimism was short-lived as the index plummeted to 46.9 in December, missing analyst expectations of 50.1. This decline marked the most significant monthly drop in three and a half years, driven by contractions in new orders, employment, and production growth, reflecting a challenging business environment.

On the final trading day of 2023, the dollar index (DXY) traded within a narrow range of 101.10 to 101.40.

Asian Session Overview

As the Asia session commenced, the DXY traded around 101.40, marking the beginning of market activity. Simultaneously, spot gold prices were upward, edging towards $2,070 per ounce. Additionally, crude oil prices exhibited strength, with WTI oil surging towards $73 per barrel.

Critical Developments for Dollar Index (DXY)

Today’s spotlight is on the Manufacturing PMI, scheduled for 2:00 pm GMT. The recent S&P Global flash US Manufacturing PMI dropping to 48.2 for December suggests a sharper decline in operating conditions, posing potential challenges for the dollar. The Federal Funds Rate target range remained steady at 5.25% to 5.50%, with the next meeting slated for January 30-31, 2024.

Global Markets: Dollar Falls, Gold Trends, and Oil in Focus

Gold (XAU) – Outlook

The S&P Global Manufacturing PMI’s weak reading for December may contribute to further dollar woes, potentially boosting gold prices. The subsequent 24-hour bias is moderately bullish for gold.

Australian Dollar (AUD) – What to Expect

With no major news events on the horizon, the Australian Dollar started the day positively, reaching 0.6820 before a slight pullback. The Reserve Bank of Australia (RBA) maintained the cash rate target at 4.35%, emphasizing concerns about elevated inflation. The next RBA meeting is on February 6, 2024, and for the next 24 hours, the bias leans weakly bullish for the AUD.

Kiwi Dollar (NZD) – Market Dynamics

Like the Australian Dollar, the New Zealand Dollar opened higher at 0.6320 before a minor retracement. The Monetary Policy Committee left the OCR unchanged at 5.50%, expressing concerns about inflationary pressures. The subsequent 24-hour bias for the NZD is moderately bearish.

Japanese Yen (JPY) – Current Scenario

The Japanese Yen showed strength against the dollar last week, but the USD/JPY opened strong today, reaching as high as 141.40. The Bank of Japan’s commitment to Yield Curve Control and inflation targets influences its decision-making. The subsequent 24-hour bias for the JPY is moderately bullish.

Euro (EUR) – Manufacturing PMI Impact

Eurozone manufacturing activity has contracted for 16 consecutive months, with a December flash reading 44.2. The European Central Bank (ECB) kept interest rates unchanged, focusing on data-dependent decision-making. The subsequent 24-hour bias for the EUR is weakly bearish.

Swiss Franc (CHF) – Market Dynamics

Despite recent strength, the Swiss Franc retraced against the dollar. The Swiss National Bank (SNB) maintained a policy rate of 1.75%, anticipating weak GDP growth and subdued demand. The subsequent 24-hour bias for the CHF is weakly bearish.

British Pound (GBP) – Manufacturing PMI Trends

UK manufacturing contracted for the 16th consecutive month in December, with a flash reading 46.4. The Bank of England’s Monetary Policy Committee voted to keep the Official Bank Rate at 5.25%. The subsequent 24-hour bias for the GBP is weakly bearish.

Canadian Dollar (CAD) – Economic Challenges

Canada’s manufacturing sector faced its seventh consecutive month of contraction. The Bank of Canada held the overnight rate at 5.0%, addressing concerns about an economic slowdown. The subsequent 24-hour bias for the CAD is moderately bearish.

Oil – Caixin Manufacturing PMI Impact

With the Caixin Manufacturing PMI registering a robust increase to 50.7 in November, it has offered a favorable setting for crude oil prices. Consequently, the following 24-hour bias for oil is moderately bullish.

As markets navigate the intricacies of economic indicators, central bank policies, and geopolitical events, traders remain vigilant for potential shifts in market dynamics.

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