November 2024 Market Roundup

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Monthly Market Update: November 2024

Currency Movements:

US Dollar (USD):
USD experienced mixed movements throughout November, starting the month strong on the back of robust retail sales and consumer confidence. However, as the month progressed, the greenback faced selling pressure, driven by the appointment of Scott Bessent as US Treasury Secretary, perceived as a fiscal hawk. The currency also saw profit-taking as core PCE data was revised slightly lower, reinforcing expectations of gradual rate cuts. Despite this, safe-haven flows bolstered USD amid geopolitical tensions between Russia and Ukraine.

British Pound (GBP):
GBP faced considerable challenges, weighed down by weaker-than-expected UK retail sales and GDP figures. Market sentiment turned cautious following dovish comments from Bank of England officials, suggesting an extended rate-cutting trajectory into 2025. Despite brief support from higher-than-expected CPI figures mid-month, the pound struggled to sustain gains due to growing concerns over economic growth and a negative reaction to recent fiscal policies.

Euro (EUR):
EUR exhibited significant volatility. Early in the month, stronger-than-expected inflation data temporarily lifted the currency. However, dovish rhetoric from ECB officials regarding deeper rate cuts pressured the EUR throughout the latter part of November. Additional downside came as PMI data revealed a contraction in economic activity, reigniting concerns over the bloc’s growth outlook.

Events Driving the Market:

  1. US Federal Reserve Policy and Data:
    November’s Fed meeting minutes confirmed a preference for gradual rate cuts, contributing to reduced expectations of aggressive easing. Additionally, lower-than-expected core PCE numbers and month-end flows added to USD volatility, with investors locking in gains.
  2. Bank of England Dovish Tone:
    The Autumn Budget continued to weigh on UK markets, with investors reassessing expectations for BoE policy. Dovish comments from Governor Bailey and Chief Economist Huw Pill emphasised slower rate cuts, further pressuring GBP as markets braced for prolonged fiscal challenges.
  3. ECB Policy Outlook:
    ECB officials hinted at further rate cuts, with some signalling the possibility of going below the neutral rate. Mixed economic data from Germany and France compounded EUR weakness, as disinflationary trends continued to worry markets.
  4. Geopolitical Risks:
    Heightened tensions between Russia and Ukraine, including missile launches and escalated rhetoric, prompted safe-haven flows into USD, JPY, and CHF mid-month. While markets stabilised toward month-end, uncertainty regarding the conflict lingered.

Market Outlook:

As we transition into December, central bank decisions and economic data will remain the primary drivers. The Fed, ECB, and BoE are all scheduled for meetings, with markets watching closely for indications of policy direction.

  • USD: Safe-haven demand and a strong US economic outlook should continue to underpin USD strength, though profit-taking might create opportunities for buyers.
  • GBP: Focus will remain on UK economic data, particularly inflation and growth figures, to gauge the likelihood of further BoE easing. Any improvement in data could offer GBP some relief, though broader sentiment remains fragile.
  • EUR: The EUR is likely to stay under pressure unless ECB rhetoric turns less dovish. December’s inflation readings will be pivotal in shaping expectations.

Geopolitical risks will also influence market sentiment, with ongoing uncertainty surrounding Russia and Ukraine likely to support safe-haven currencies.