Forex Cautious as USD Rises on Trump Win, Awaiting UK Jobs and Fed Sig
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Global forex markets reflect cautious sentiment as USD strengthens on Trump’s election win, sparking fears of tariffs and inflationary policies that could delay Fed rate cuts. Meanwhile, Asian currencies and stocks are under pressure due to Chinese economic uncertainty and declining risk appetite. Traders await UK labor data and speeches from Fed officials for clearer direction, with USD seeing broad gains across major currencies.
USD Extends Gains Amid Trump's Economic Policies and Fed Rate Cut Revisions
The U.S. Dollar (USD) maintains its bullish trend, capitalizing on investor optimism around Trump’s pro-growth policies, which are expected to spur U.S. inflation and restrict the Federal Reserve’s (Fed) ability to cut rates aggressively. Following the election, Fed rate-cut expectations have fallen, with a quarter-point cut in December now seen as only 65% probable, down from 85%. This revised outlook, coupled with higher U.S. bond yields, supports sustained USD demand across the forex board.
Risk-Off Sentiment Hits Asian Markets as Chinese Economic Concerns Persist
The Asian session was marked by a negative shift in risk appetite, with investors moving away from higher-yielding currencies and assets amid fears over U.S.-China trade tensions. News from Bloomberg reported that China may cut its deed tax to boost housing demand, but these measures provided limited relief. Semiconductor stocks led declines after the U.S. requested Taiwan Semiconductor Manufacturing to halt shipments of advanced chips to Chinese clients, increasing market concerns over Chinese economic resilience.
G10 Currency Moves: USD Leads as GBP, AUD, and EUR Struggle
USD/JPY: Stabilized above 153.50, supported by USD strength and no intervention from Japanese officials. Uncertainty over BoJ rate hikes also keeps JPY subdued.
AUD/USD: Weakens near 0.6550, pressured by falling commodity prices, Chinese economic concerns, and weak Australian Westpac Consumer Confidence data.
NZD/USD: Tracks AUD weakness, trading around 0.5955 as market sentiment remains cautious.
EUR/USD: Approaching 1.0600 as German political risks and expectations of an ECB rate cut weigh on the Euro.
GBP/USD: Extending its decline toward 1.2800 as traders look to UK labor market data for signs of economic resilience.
USD/CAD: Rebounding near 1.3950, aided by USD strength and lower oil prices, with WTI crude dipping below $68.
Market Focus: Fed Speeches, UK Labor Data, and Key Economic Indicators
Traders now turn to upcoming speeches from Fed policymakers and key economic data releases for fresh cues. UK labor market data and German ZEW Economic Sentiment may provide insights into market direction, while Fed Chair Jerome Powell’s remarks are expected to shed light on the Fed’s stance. Friday’s U.S. retail sales and Japanese Q3 GDP data will also be closely watched for further impact on forex trends.
USD Extends Gains Amid Trump's Economic Policies and Fed Rate Cut Revisions
The U.S. Dollar (USD) maintains its bullish trend, capitalizing on investor optimism around Trump’s pro-growth policies, which are expected to spur U.S. inflation and restrict the Federal Reserve’s (Fed) ability to cut rates aggressively. Following the election, Fed rate-cut expectations have fallen, with a quarter-point cut in December now seen as only 65% probable, down from 85%. This revised outlook, coupled with higher U.S. bond yields, supports sustained USD demand across the forex board.
Risk-Off Sentiment Hits Asian Markets as Chinese Economic Concerns Persist
The Asian session was marked by a negative shift in risk appetite, with investors moving away from higher-yielding currencies and assets amid fears over U.S.-China trade tensions. News from Bloomberg reported that China may cut its deed tax to boost housing demand, but these measures provided limited relief. Semiconductor stocks led declines after the U.S. requested Taiwan Semiconductor Manufacturing to halt shipments of advanced chips to Chinese clients, increasing market concerns over Chinese economic resilience.
G10 Currency Moves: USD Leads as GBP, AUD, and EUR Struggle
USD/JPY: Stabilized above 153.50, supported by USD strength and no intervention from Japanese officials. Uncertainty over BoJ rate hikes also keeps JPY subdued.
AUD/USD: Weakens near 0.6550, pressured by falling commodity prices, Chinese economic concerns, and weak Australian Westpac Consumer Confidence data.
NZD/USD: Tracks AUD weakness, trading around 0.5955 as market sentiment remains cautious.
EUR/USD: Approaching 1.0600 as German political risks and expectations of an ECB rate cut weigh on the Euro.
GBP/USD: Extending its decline toward 1.2800 as traders look to UK labor market data for signs of economic resilience.
USD/CAD: Rebounding near 1.3950, aided by USD strength and lower oil prices, with WTI crude dipping below $68.
Market Focus: Fed Speeches, UK Labor Data, and Key Economic Indicators
Traders now turn to upcoming speeches from Fed policymakers and key economic data releases for fresh cues. UK labor market data and German ZEW Economic Sentiment may provide insights into market direction, while Fed Chair Jerome Powell’s remarks are expected to shed light on the Fed’s stance. Friday’s U.S. retail sales and Japanese Q3 GDP data will also be closely watched for further impact on forex trends.