Safe Havens Gain as Oil Corrects and Metals Face Pressure

This week has been marked by significant fundamental drivers, headlined by the U.S. presidential election, where Donald Trump’s victory has shifted market sentiment. The election result has had a profound effect on various asset classes, particularly bolstering U.S. indices, which have seen an impressive rally. American indices are closing out the week on a high note, reflecting optimism tied to expectations of Trump’s economic policies. In contrast, European indices are struggling to maintain momentum, facing headwinds due to local economic and political uncertainties.

Thursday was particularly eventful with dual interest rate decisions from the Federal Reserve (Fed) and the Bank of England (BoE). Both central banks announced 25 basis point cuts, aligning with market expectations. However, despite the Fed’s decision and subsequent press conference, there was no notable increase in volatility in the U.S. dollar. The currency has remained relatively stable, overshadowed by the stronger influence of Trump’s election outcome. The Fed’s statement and press conference failed to incite significant movement, suggesting that market participants are primarily focused on broader political developments rather than monetary policy adjustments.

On the currency front, safe havens have seen some appreciation. The Japanese yen, U.S. dollar, and Swiss franc are the standout performers today, suggesting a cautious tone among traders. The Australian dollar, which had a strong performance earlier this week alongside the New Zealand dollar, is showing signs of weakness as we close the week. Despite this correction, both currencies have enjoyed notable gains over the past few days, boosted by risk-on sentiment and strong commodity performance.

Today’s key data points include Canadian job reports, which will be crucial for assessing the health of Canada’s labor market. Additionally, the University of Michigan Consumer Sentiment report from the U.S. will provide insights into consumer confidence, potentially affecting broader market sentiment.

Source: https://www.axiory.com/analytics/market-news/safe-havens-gain-as-oil-corrects-and-metals-face-p