Financial Markets Overview on November 18
As the new week begins, financial markets are experiencing relative calm. While there are no major macroeconomic data releases scheduled for Monday, investors are closely monitoring geopolitical developments and central bank statements for cues on market direction.
US Dollar Strength Continues
Boosted by hawkish remarks from Federal Reserve officials, especially Chairman Jerome Powell, the US Dollar Index surged over 1.5% last week, maintaining a consolidation phase above 106.50 on Monday. Chicago Fed President Austan Goolsbee is set to deliver a speech later in the day, with US stock index futures pointing to a positive open following Friday’s declines.
Major Currency Prices
The table below illustrates the percentage change of the US Dollar against other major currencies in the last 7 days:
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.65% | 2.22% | 1.14% | 1.33% | 1.83% | 1.77% | 1.26% |
The US Dollar showed strength against the British Pound, gaining 2.22% in the last week.
Geopolitical Tensions
CNN News reported that US President Joe Biden has authorized Ukraine to use powerful American weapons to target Russia, responding to Russia’s deployment of North Korean ground troops. This development has raised concerns in Washington and Kyiv.
Market Analysis
Here’s a breakdown of key currency pairs and commodities:
- EUR/USD: Fell nearly 1.7% last week, trading around 1.0550 on Monday. ECB President Christine Lagarde will address economic issues in Paris today.
- GBP/USD: Declined over 2% last week, hovering below 1.2650. UK CPI data is due on Wednesday.
- USD/JPY: After a 1% drop on Friday, the pair fluctuates around 154.50. BoJ Governor Ueda cites a moderate Japanese economic recovery.
- Gold (XAU/USD): Touched two-month lows below $2,540 last week, now rebounding towards $2,600.
Central Banks FAQs
Central banks play a crucial role in maintaining price stability in economies. Here are some FAQs:
- Central banks aim to control inflation and deflation by adjusting policy rates.
- Monetary tightening and easing refer to raising or lowering benchmark rates respectively.
- Central banks strive for political independence and balance between inflation and economic growth.
- Chairpersons lead policy meetings, aiming to communicate monetary policy without causing market disruptions.