Money off the table

All asset classes experienced moderate profit taking this week. However, US equities showed moderate gains. The Dow Jones Industrial Average was up about 0.81%, the S&P 500 gained about 0.32% and the Nasdaq Composite closed flat but in the green. European majors, the FTSE 100 gained about 1.81%, while the German Dax and the French CAC 40 saw mild profit booking. Japanese and Korean equities gained close to 2% while the Japanese Nikkei 225 was largely stable but closed mildly in the red this week. The Indian Nifty 50 hit fresh Lifetime highs to close up about 1.7%. Chinese markets, the Shanghai Composite and the Shanghai Shenzhen both bounced back up about more than 2% but continue to remain in extreme risk off mode.

Treasury yields hold

The US 2-Year and the 10-Year yields were range bound this week. Fed’s more dovish tone from its last meeting has resulted in investors pricing in around 150 basis points of interest rate cuts next year. Sticky inflation is likely to dent these rate-cut expectations. The 2-Year and the 10-Year yields steadied around 4.2% and 3.8% respectively.

Precious metals mixed

Rate cut expectations and “no recession” sentiment augurs well for precious metals. Spot Gold gained 0.5% this week to close at $2062. Silver futures lost more than 2% this week to close at $24.025.

Dollar in downtrend

Risk on sentiment after the Fed’s last meeting and expectations of about three rate cuts in 2024 has been taking a toll on the Dollar. The Dollar index lost about 0.31% this week and closed at 101.38.and closed this week at 101.71 with a decline of 0.80%.

EUR/USD continues uptrend

Despite facing consistent challenges from Eurozone economic data, the EUR/USD pair continues its rebound against the dollar. The pair is up 0.25% this week. The ongoing bullish sentiment in EUR/USD is coupled with the declining US dollar.

USD/JPY stable

After the Bank of Japan kept rates steady, the U.S. dollar has been broadly softer against the Yen. The pair closed to 141.04 per dollar, with a decline close to 1% this week. The pair is on a steady decline after BOJ kept its ultra-low interest rates unchanged and the Fed gave its dovish policy guidance.

USD/GBP flat

USD/GBP continued to be in sell off mode this week and closed mildly lower by 0.23%. Sterling’s recent strength against the dollar follows expectations of three rate cuts by the Fed in 2024.

Crude cools off

WTI crude oil futures surged above $76 this week but closed at $71.35 with a loss of 3% due to no disruption of oil supplies so far despite Red Sea tensions. OPEC’s production cuts haven’t been enough to stop the steep decline. Last week, crude bulls got a leg up due to increased tensions in the Red Sea. Overall, the oil market is not exactly bullish. Future market price projections remain uncertain.

Cryptos uncertain

Above $41,000, the next level to watch for Bitcoin was $44,800 to $45,000. However upward momentum seems to be stalling below $44,500. $45,000 is a key psychological level and failure to push past this level could be a bearish signal. Similarly $2400 is key level for Ethereum. This week Bitcoin fell 4.4%, Ethereum went down nearly 1% after hitting a high at $2443. Prices of other popular tokens such as Dogecoin, Solana, Shiba Inu took a hit amid volatility and profit booking this week.

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