Market Update: November 28th
Here’s a quick overview of the financial landscape as of Friday, November 28th. After experiencing significant fluctuations on Thursday, the markets have settled into a quieter rhythm. With U.S. stock and bond markets closing early today for Black Friday, trading activity remains low as we head into the weekend. Later, we’re expecting the release of Canada’s GDP figures for the third quarter.
Currency Movements
This week, the U.S. dollar showed some weakness against major currencies. In particular, the New Zealand dollar emerged as the strongest performer against the USD.
On Thanksgiving Day, the USD index didn’t make any notable changes but managed to inch up in the morning, hovering above 99.50 as the Federal Reserve enters a blackout period.
Looking across the Atlantic, German retail sales dipped by 0.3% in October—lower than the expected 0.2% increase. In response, the euro faces some bearish sentiment, trading below 1.1600.
In Japan, the unemployment rate held steady at 2.6% for October, slightly above the predicted 2.5%. Annual consumer price index inflation for November was recorded at 2.7%, down from 2.8% in October, which aligns with forecasts. Consequently, USD/JPY has remained stable, staying above 156.00 this morning.
As for GBP/USD, after a solid run earlier in the week, it has seen a downward revision in Friday trading, approaching the 1.3200 mark, although it looks poised to end the week positively.
Gold, on the other hand, gained some traction during the Asian session, trading above $4,170—up over 2.5% for the week. It’s been gaining momentum, even though there wasn’t much decisive movement the previous day.
For USD/CAD, the pair has managed to stabilize around 1.4050 after spending a few days in the red. Canada’s economy is anticipated to grow at an annualized rate of 0.5% for the third quarter, a turnaround from the contraction of 1.6% seen previously.
GDP Insights
The GDP, or gross domestic product, essentially measures how an economy grows over a specific timeframe, usually quarterly. It’s often more reliable when comparing current figures to past performance, whether by quarter or year. For instance, annualized GDP numbers can sometimes mislead, particularly if temporary shocks disrupt growth, as seen during the early months of the pandemic.
A growing GDP typically reflects a healthier economy, which can support the national currency. Conversely, a shrinking GDP may signal economic trouble. As growth encourages spending, it may also lead to inflation, compelling central banks to consider raising interest rates, which, in turn, can elevate capital inflows and strengthen the local currency.
On the flip side, rising GDP may lead to inflation that triggers higher interest rates, potentially placing downward pressure on gold prices due to the increased opportunity cost of holding it compared to cash savings.
