Wednesday witnessed significant market movements influenced by a confluence of factors, including subdued economic data, reduced Treasury borrowing concerns, and Federal Reserve Chair Jerome Powell’s reluctance to endorse a December rate hike. This unique combination of elements led to a weakening of the U.S. dollar (USD), an 11-basis point decline in 10-year Treasury yields, and a surge in equities, with the Nasdaq index notably rising by 1.65%.
In the realm of currency exchange, the Australian dollar (AUD) emerged as the frontrunner, benefiting from a broader USD selloff. It gained 60 pips due to global monetary tightening shifts and China’s recent policies aimed at easing and boosting spending. This resulted in the strongest AUD/USD closing rate since October 10. Conversely, the Euro lagged behind other major currencies, and the Japanese Yen also experienced fluctuations as USD/JPY slipped below the 151.00 mark.
Turning to the commodities market, both gold and West Texas Intermediate (WTI) crude oil faced downward pressure. Gold prices dipped to $1,978 per ounce, while WTI crude oil prices retreated to $80.92 per barrel.
Investors are now eagerly anticipating the release of Friday’s jobs report and the ISM services report. The potential for softer figures in these reports could further suppress yields, potentially triggering a “fear of missing out” (FOMO) sentiment as the prospect of 5% yields appears to be slipping away.
