US CPI Slows, While Unemployment Surges

Last week, U.S. inflation took a surprising dip, marking 3.2% for October, below expectations and signalling a potential pause in Federal Reserve rate hikes. This news, coupled with weak labour market data, saw continuing jobless claims spike, driving S&P500 Futures up by 2.19% for a third consecutive week of gains. Simultaneously, the Dollar weakened by 1.84% against major currencies, potentially reversing a three-month upward trend. This shift suggests a significant market sentiment swing, favouring risk assets amid anticipation that the Fed might halt rate hikes, influencing both equities and currency markets.

U.S. Dollar Hits Two-Month Low as Fed Rate Cut Bets Rise:

The U.S. dollar has faced significant pressure, hitting a two-month low, with the dollar index at 103.64. Traders are adjusting their expectations, believing that the Federal Reserve has reached the end of its tightening cycle. With a 30% chance of rate cuts as early as March 2024, markets are closely watching the FOMC minutes for insights. The Dollar’s decline has led to multi-month highs for the euro and the Australian dollar.

Oil Prices Climb on OPEC+ Supply Cut Expectations:

Oil futures have seen an uptick, with Brent crude reaching $81.18 per barrel and WTI crude at $76.40 per barrel. The rise follows expectations that OPEC+ might deepen supply cuts in response to a four-week decline in oil prices. Given the fall in speculative positioning and higher-than-expected inventories, Goldman Sachs analysts suggest that deeper cuts are possible. The OPEC+ meeting on November 26 will be crucial in determining the future direction of oil prices.

Sources: Trading Economics, People’s Bank of China, MT Newswire, Reuters, Dow Jones Newswire, CNBC.

Piece Written by Nkosilathi Dube & Mfanafuthi Mhlongo, Trive Financial Market Analysts

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