As the market enters the final countdown to 2024, global financial markets showed a complex pattern of fluctuations last week. Stocks; commodities; foreign exchange; and bond markets are all affected by the latest economic data and policy expectations, showing significant divergent trends. Bitcoin remains strong above $101,000. U.S. President-elect Trump once again promised to establish a national strategic reserve of Bitcoin. Market rumors say that China and Russia will also follow suit. The U.S. dollar index ended the week at 106.95, gold fell as low as $2,648, the U.S. producer price index exceeded expectations, and "hawkish interest rate cuts" suppressed buying of precious metals. The United States said the Middle East was close to reaching a "ceasefire" agreement, causing risk aversion in the Middle East to subside.

Last week, U.S. stocks closed mixed. Wall Street ended a tumultuous week, with the Dow Jones Industrial Average ending lower for a seventh consecutive session, its longest losing streak since 2020, while the Nasdaq rose slightly, barely maintaining its weekly gain. The Dow fell 1.8% for the week to 43,828.06 points; the S&P 500 fell 0.6% to 6,051.09 points, ending three consecutive weeks of gains; and the Nasdaq rose 0.3% to 19,926.72 points.

Gold prices fell to around $2,647 an ounce before the end of last week on technical profit-taking as the dollar held steady at its highest level in more than two weeks. But gold prices were still up more than 0.6% for the week. Gold prices have experienced a year of explosive growth and are now entering the end of the year. There may be some pullback in the last few weeks, but this will be short-lived and I believe gold prices will continue to rise sharply.

Silver prices fell last week after hitting a new five-week high of $32.330. Silver prices came under pressure following the conclusion of China's two-day economic work conference. At the same time, higher-than-expected U.S. producer price index data in November also put pressure on silver prices.

The U.S. dollar index rose by about 1% last week and closed slightly below 107.00, marking its best weekly performance in a month. This is mainly due to rising market expectations for the Federal Reserve to slow down the pace of interest rate cuts. The dollar will still be subject to the impact of this week's Federal Reserve policy meeting and the latest economic data, and volatility may further intensify.

In Japan, the yen/dollar fell 2.46% last week as market expectations for the Bank of Japan to raise interest rates this month increased slightly. The market suggested that the probability of raising interest rates this week was 41.3%. If the policy remains unchanged, the yen may face further declines. depreciation pressure.

EUR/USD fell below 1.05 last week, which is at recent lows. The European Central Bank cut interest rates by 25 basis points, its fourth rate cut this year, and hinted that more easing policies may be adopted in the future. The European Central Bank's policy tone puts pressure on the euro.

The UK 10-year government bond yield fell to 4.36%, below this week's high. GBP/USD fell sharply to two-week lows ahead of 1.2600. However, looking forward to the medium-term trend, the market's view on the pound is still optimistic, and the British fiscal budget is expected to support domestic economic growth and the stabilization of the job market.

Last week, AUD/USD continued to struggle after hitting another one-year low around 0.6336. The Trump administration's tariff threats have boosted the U.S. dollar across the board and created headwinds for the AUD/USD exchange rate.

Crude prices rallied back above $70.00 last week, with the OPEC+ report a good factor for higher prices, but traders are still sounding the alarm on predictions that President-elect Trump will remain in the White House through 2025. The crude oil market has been positive over the past week but remains in a consolidation mode. Because of this, the market is likely to continue to see a lot of price movement, with prices trying to establish some kind of support platform in WTI and Brent.

Bitcoin got off to a rocky start last week, hitting a low of $94,263 during the week, but rebounded to around $100,000 before the weekend, with bulls showing amazing resilience. Trading talk continues to revolve around U.S. President-elect Trump, who has pledged to build a strategic reserve of Bitcoin as large as “petroleum.”

In the U.S., market confidence in a quarter-point rate cut by the Federal Reserve in December is almost 100%, while the likelihood of another rate cut in January has dropped to around 24%. Bond yields were relatively flat last week as investors' focus gradually turned to the policy outlook for 2025. U.S. Treasury yields edged higher. The 10-year Treasury yield rose to 4.40% from 4.34% late Thursday.

Outlook for this week:

Looking ahead to this week, short-term trends in global markets will continue to be dominated by policy decisions and economic data. As the Federal Reserve, the European Central Bank and the Bank of Japan hold policy meetings one after another, market volatility may further increase. Crude oil demand signals, technical barriers for precious metals, and U.S. dollar policy expectations will be the main focus this week. Investors need to be alert to the short-term impact brought about by changes in policy orientation and prepare for next year's transaction layout.

Global central bank policies and key economic data will be the focus of the market this week. The market expects the Federal Reserve to cut interest rates by 25 basis points, but the outlook for interest rates in 2025 will be the core focus; the Bank of England may remain on hold and continue gradual easing; the European Central Bank has clarified more interest rate reduction paths, but the economic outlook remains weak; the Bank of Japan may suspend interest rate increases until January next year.

USA :

In the United States, markets expect the Federal Reserve to cut its main benchmark interest rate again, its third rate cut this year. The Fed hopes to bring further relief to the U.S. economy by lowering long-term interest rates. The "stickiness" of U.S. interest rates may be coupled with signs of an uptick in the U.S. economy's strong performance, which may make the Federal Reserve more cautious in guiding further interest rate cuts in 2025. In addition, the impact that Trump's second term may have on future inflation expectations also adds uncertainty to expectations for this interest rate cut.

Europe:

The European Central Bank last week cut interest rates by 25 basis points as expected, although it could well have cut rates by 50 basis points as weak growth indicators and estimates that euro zone interest rates remain well above neutral continue to weigh on the economy. However, the central bank made it clear that there will be more interest rate cuts in the future. The economic outlook has gradually worsened over the past month, with an important reason being the weak Eurozone PMI growth indicator in November. Therefore, December data due out this week is particularly important. If the data does not improve significantly, GDP may decline in the fourth quarter. However, ahead of the next ECB interest rate decision, the Swiss and Canadian central banks both cut interest rates by 50 basis points this week, with Switzerland in particular more than expected.

U.K:

The Bank of England is expected to keep bank interest rates unchanged at 4.75% on Thursday, December 19, continuing its gradual easing cycle. Markets do not view the labor market report and November inflation data as having a major impact on the Bank of England's short-term decision, but rather as being more important for the outlook for 2025.

Japan:

The Bank of Japan may raise interest rates rather than cut them. It was previously thought that the December meeting might be the time to raise interest rates, but since support for the yen is no longer urgent, the market still believes that the Bank of Japan will remain on hold on interest rates and postpone the next expected rate hike to January. .

Australia:

The Reserve Bank of Australia kept its key interest rate unchanged at 4.35% at its final monetary policy meeting of the year. However, markets noted that the tone surrounding the decision was decidedly more dovish, causing the Australian dollar to weaken sharply in the initial reaction. As a result, markets will be watching these data closely in the coming weeks to gauge expectations for February. The Reserve Bank of Australia is expected to cut interest rates in February. The current market assessment of the probability of such a move is around 64%. Pricing across the board in the coming weeks will further weigh on the Australian dollar.

China:

In its latest pricing, the People's Bank of China kept key lending rates unchanged. The one-year loan market quoted interest rate remains at 3.1%; the five-year loan interest rate remains at 3.6%. Thanks to rate cuts in October and July, both rates remain at historic lows. A "moderately loose" monetary policy strategy will be adopted in 2025. The move marks a positive shift from a "cautious" stance since 2011. And maintain the ambitious GDP growth target of 5% next year.

Overview of important events and economic data this week: (AEDT)

Important:

Monday (December 16): European Central Bank President Christine Lagarde speaks

Tuesday (December 17): Bank of Canada Governor MacCallum delivers a speech

Thursday (December 19: The Federal Reserve announced its interest rate decision and summary of economic expectations; Federal Reserve Chairman Powell held a monetary policy press conference; the Bank of Japan announced its interest rate decision; Bank of Japan Governor Ueda Kazuo held a monetary policy press conference; the Bank of England announced interest rates Resolutions and Minutes.

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