Euro extends gains to three-month trough, approaching $1.1
Euro rose in European trade on Monday against a basket of major rivals, extending gains for the third straight session against the dollar, scaling a three-month high and approaching the $1.1 barrier.
Such gains come as concerns about the the widening interest rate gap between the US and Europe diminish, with analysts now expecting both the Federal Reserve and the European Central Bank to maintain interest rates unchanged next month.
EUR/USD
EUR/USD rose 0.3% to $1.0940, the highest since August 30, after rising 0.5% on Friday, the second profit in a row as the dollar suffers widespread losses against rivals.
Euro rallied 2.1% last week against the dollar, the second weekly profit in three weeks, and the largest since July.
A spate of weak US inflation and labor data hurt chances of another US interest rate hike next month.
Interest Rate Gap
The current interest rate gap between Europe and the US stands at just 100 basis points, the lowest gap since May 2022, and will likely remain so until the first quarter of next year.
Most analysts expect no change in US and European monetary policies when both the Fed and the ECB hold periodic meetings in December.
The $1.1 Barrier
Euro is a few cents away from touching the $1.1 barrier as the new week opens up with strong risk appetite, following a spate of weak US consumer and producer prices data that pummeled the odds of another US interest rate hike in December to just 1%.
The Fed is all but certain now to end the current cycle of policy tightening and prepare for the next step, which interest rate cuts next year.
European Economy
Economists are warning that the European economy is heading to a mild recession, likely in the fourth quarter of 2023, and potentially in early 2024 as well.
Gold backs off two-month high as US yields rebound
Gold prices fell in European trade on Monday away from two-week highs on profit-taking, while US 10-year treasury yields rebound.
Now investors await strong data on the future of US interest rates, and the Federal Reserve's last meeting minutes.
Gold Prices Today
Gold prices fell 0.4% to $1,973 an ounce, after closing flat on Friday away from a two-week high at $1,993.
Gold prices rallied 2.2% last week, the first profit in three weeks following a stream of weak US data.
Such data hurt the odds of another US interest rate hike in December.
Investors now mostly expect the Fed to end the current cycle of policy tightening as markets focus on the likely timeline of the next interest rate cuts.
US Yields
US 10-year treasury yields rose 0.75% on Monday away from two-month lows at 4.381%, pressuring non-yielding assets.
Investors also await important data on the future of US interest rates, especially the Fed's minutes, scheduled for release tomorrow.
The minutes will shed light on the inner thoughts of the Federal Reserve officials and the likely path ahead for monetary policies.
The SPDR
Gold holdings at the SPDR Gold Trust rose 12.98 tonnes on Friday, the largest such increase since March 2022.
Total holdings are now up to 883.43 tonnes, the highest since September 11.
Palladium gains ground on track for largest weekly profit in year
Palladium prices rose on Friday as the dollar declined against a basket of major rivals on track for the best weekly performance in a year.
Investors are betting the Federal Reserve has reached the end of the policy tightening cycle, in turn pressuring dollar and US treasury yields.
Now traders expect the Fed to cut interest rates by next May as inflation continues to slow down.
Recent data indicated US consumer prices stabilized in October m/m, while core prices rose just 0.2%, while producer prices slowed down to 3-1/5 year nadir.
A potential cut in interest rates will underpin non-yielding assets such as gold and industrial metals.
Dollar on the other hand is heading for a weekly loss, making palladium and other metals cheaper to holders of other currencies.
The dollar index fell 0.3% as of 15:45 GMT to 104.01, with a session-high at 104.5, and a low at 103.9.
Gold spot futures rose 1.2% to $1,062.5 an ounce as of 15:46 GMT.
Palladium is heavily used in the automotive industry, to reduce exhaust fumes.
Oil prices head for fourth weekly loss in row
Global oil prices rose in European trade for the first time in four days off four-month lows on active short-covering.
Oil prices nonetheless are heading for the fourth weekly loss in a row amid renewed concerns about global demand especially in the US and China.
Global Oil Prices
US crude rose 1.4% to $73.86 a barrel, while Brent rallied 1.1% to $78.27 a barrel.
US crude swooned 4.8% on Thursday, plumbing a four-month lows at $72.22, while Brent slid 4.4% to $76.65 a barrel, the lowest since July 7.
Weekly Trading
Oil prices are down 4.25% so far this week on track for the fourth weekly loss in a row.
Both OPEC and the International Energy Agency now expect supplies to decline in the fourth quarter, however, a series of weak US, Chinese, and European data sparked concerns about global fuel demand.
US Stocks
The Energy Information Administration reported a spike of 17.5 million barrels in US crude stocks in the last two weeks.
Total stocks are now up up to 439.4 million barrels.
US Production
The EIA reported no change in US crude production last week, remaining at 13.2 million barrels, the highest in US history.
Chinese Demand
Chinese refinery output declined once again in October according to latest official data, as demand on fuel declines.
Chinese housing prices also fell for the fourth straight month in October, while real estate sales tumbled by 20.33% y/y.
Analysis
Analysts notice that technical factors limit upward movements in oil prices, in addition to clear global pressures due to changes in the demand-supply dynamics worldwide.