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The U.S. dollar index continues to decline, and the market focuses on the restart of U.S. economic data
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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Market Analysis]: The U.S. dollar index continues to decline, and the market focuses on the restart of U.S. economic data." Hope this helps you! The original content is as follows:
On November 12, in early trading in Asia, spot gold was trading around US$4,134.50 per ounce. Gold prices continued their gains on Tuesday, hitting their highest level in nearly three weeks. The market expects that the U.S. government shutdown is about to end, and the subsequent resumption of economic data may create conditions for the Federal Reserve to cut interest rates next month, which provides strong support for gold prices; U.S. crude oil traded around $61 per barrel. Oil prices rose on Tuesday, boosted by new U.S. sanctions on Russia and the expected end of the U.S. government shutdown, but concerns about oversupply still limited oil price gains.
The U.S. dollar generally fell against the euro and yen on Tuesday, with the U.S. dollar index falling 0.24% to 99.39. The market is concerned that the U.S. labor market may deteriorate, and it is expected that economic data to be released after the government shutdown ends may further confirm the economic slowdown.
Preliminary estimates released by ADP Research on Tuesday showed that in the four weeks to October 25, U.S. private xmxyly.companies laid off an average of 11,250 people per week. The data heightened concerns about a weakening job market. Market strategists say: There is little news during the government shutdown. As the government is about to resume operations, more cracks will begin to be seen.
The U.S. Senate approved a xmxyly.compromise bill on Monday, ending the longest government shutdown in history. The bill will next be submitted to the Republican-majority House of Representatives for a vote. House Speaker Johnson is expected to pass the bill on Wednesday and send it to President Trump to sign into law.
Goldman Sachs economists predict that if the government resumes operations later this week, the U.S. labor statisticsThe National Bureau of Statistics will release a new data schedule between November 13th and 17th, and the September employment report is likely to be released on November 18th or 19th.
The market currently believes that the probability of the Federal Reserve cutting interest rates in December is 67%, and this expectation puts pressure on the US dollar. Meanwhile, the euro found support as the European Central Bank's key interest rate was expected to remain unchanged until 2027, while the Federal Reserve was expected to ease monetary policy. The euro rose 0.29% to $1.159 against the dollar, and the yen rose 0.06% to 154.06 yen against the dollar.
Affected by the Veterans Day holiday, the U.S. bond market was closed on Tuesday, and overall market trading volume was low. Sterling was little changed against the dollar after data showed the UK labor market cooled significantly in the third quarter, with unemployment rising sharply and wage growth slowing.
Asian markets
Brad Jones, assistant governor of the Reserve Bank of Australia, warned that global markets may be underestimating geopolitical risks and systemic fragmentation. At a conference today, he highlighted that risk premiums across major asset classes had fallen to "worrying lows", suggesting investors were failing to fully price in potential shocks.
"We're just surprised that it's not reflected more in spreads given what we've observed," Jones said, noting what he called "a range of potential risks to the exposure."
Jones also drew attention to changes in the dynamics of global reserve management and pointed to "new evidence of fragmentation" in the way central banks allocate assets. He said the recent surge in official gold holdings was driven by a different group of countries and reflected a growing desire to diversify away from dollar- and euro-denominated assets amid heightened concerns about "asset seizure sanctions risks".
European Markets
Bank of Canada policymaker Megan Greene pushed back on expectations for a December rate cut, saying weak labor data this morning was not enough to change her stance.
Green, one of five members of the Monetary Policy xmxyly.committee who voted to keep rates on hold last week, argued at a conference in London that the labor market may have passed its most dramatic phase of adjustment.
She noted that "high-frequency data" showed early stabilization, adding that many xmxyly.companies still planned to significantly raise wages. Green said "the worst is probably over", although she admitted the latest unemployment rate of 5.0% - the highest level in four years - "isn't great".
Investor confidence in Germany weakened slightly in November, indicating that concerns about Europe's largest economy remain cautious despite signs of improvement in the broader region. Germany's ZEW economic sentiment index fell to 38.5 from 39.3, below expectations of 42.5. The current situation index improved modestly from -80.0 to -78.7.
In contrast, the euro zone-wide ZEW sentiment index rose to 25.0 from 22.7, above expectations of 23.5. status quo refers toThe number improved to -27.3, an increase of 4.5 points.
ZEW President Achim Wambach pointed out that although market sentiment is generally stable, investors' trust in Germany's economic policy responses has weakened. He said the government's investment initiatives may provide short-term stimulus, but "structural problems remain."
British labor market data released yesterday showed further cooling, reinforcing expectations that the Bank of Canada will cut interest rates again in December.
In October, the number of employed people fell by -0.1% month-on-month, or -32k, while the number of applicants increased by 29k, exceeding the expected increase of 20.3k. Wage pressure has also eased significantly. Median monthly salary increased by only 3.1% year-on-year, significantly lower than the previous 5.9%, setting the lowest growth rate since mid-2020.
U.S. market
According to statistics from the U.S. automatic data processing xmxyly.company ADP, in the four weeks to October 25, the U.S. private sector lost an average of 11,250 jobs per week; Goldman Sachs estimates that U.S. non-farm employment fell by about 50,000 in October, which will be the largest decline since 2020.
The U.S. Senate voted to pass the temporary appropriations bill, and the House of Representatives is reported to start voting on the bill at 5 a.m. Beijing time on Thursday.
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