An important development from last week was the delayed release of the US jobs data for September, which was postponed due to the government shutdown.
The payroll figures surpassed expectations, with an increase of 119,000 jobs.
However, the unemployment rate also climbed to 4.4 percent. Data for October and November will not be released until the Federal Reserve’s next meeting in December, which may complicate efforts to lower US interest rates, as the likelihood of a rate cut has diminished to approximately 26 percent.
The market remains divided on the issue of interest rates, and uncertainty surrounding them is likely to persist, given the differing opinions on potential rate cuts among Fed members.
The most recent minutes from the Federal Open Market Committee (FOMC) in October indicate that current sentiment is roughly split.
This week’s US economic data will come out earlier than usual, due to Thanksgiving and Black Friday, with key inflation and unemployment figures arriving post-Fed meeting.
The “Beige Book” will be a significant piece of data this week, providing insights into the economy’s health.
However, the market may be less responsive to these numbers, which could be less reliable due to the government shutdown.
Meanwhile, risk sentiment and weaker economic conditions in other regions have strengthened the US dollar against the Japanese Yen, Euro, and Pound Sterling.
The trajectory of the dollar next week could hinge on the resolution of pending tariff issues and geopolitical developments.
The US administration’s position on chip sales to foreign nations, anticipated tariff increases of 15 percent to 20 percent on EU goods, and ongoing peace negotiations between Russia and Ukraine could influence financial markets. The US government has already proposed a peace plan to both nations.
Additionally, the ongoing discussions in Congress regarding an artificial intelligence (AI) bill and its potential outcomes, as well as China’s reaction, could also be significant.
In a separate note, despite recent challenging economic and political conditions, Moody’s has reaffirmed its Aa3 rating with a stable outlook for the United Kingdom, citing substantial wealth, credit strength, a robust institutional framework, a diversified economy, and a commitment to reducing the large public deficit.
However, Moody’s does not anticipate high growth, projecting only a 1.5 percent increase and a gradual reduction in the deficit.
The UK is set to present its budget for 2026 in Parliament on Wednesday, November 26, with the focus likely to be on tax increases aimed at addressing a £ 20 billion fiscal gap. Property taxes are expected to rise to meet this target, as there appears to be no plan for increasing personal taxes.
This has also led to downward pressure on the Pound Sterling and rising gilt yields. However, aggressive tax increases could also create political uncertainty.
Furthermore, the Japanese Yen experienced notable weakening last week before recovering slightly surrounded by the uncertainty about the economic outlook and unclear signals from authorities.
Friday’s Consumer Price Index (CPI) may offer insights into the Japanese economy. As the Yen approaches its peak for the year at 158.65-70, it will be interesting to see whether the Bank of Japan intervenes or allows the currency to rise further towards the 160 mark.
Last week, despite a decline in the US stock market, gold prices failed to take advantage of the weakened conditions. This is not a promising indicator for the metal, which could potentially see a drop if it doesn’t seize the opportunity.
On Monday, the stock market may offer initial direction for investors. I doubt that gold will decline significantly if US stocks continue their downward trend, which could ultimately impact the US dollar adversely.
Additionally, the market will be closely monitoring any developments related to the US peace plan for a resolution between Russia and Ukraine. Any news, whether positive or negative, could influence gold prices, with a greater potential for a rise in bad news. Moreover, the release of US economic data and statements from FOMC members will play a crucial role in driving gold’s movements.
This is why I am not dismissing the possibility of another week filled with volatility ahead.
WEEKLY OUTLOOK — NOV 24-28
GOLD @ US$ 4066— Another turbulent period for gold lies ahead. If the crucial support level of US$ 3970 is breached, the likelihood of testing US$ 3890 will rise. However, if it breaks through US$ 4138 and then US$ 4185, it will pave the way for a test of US$ 4260 levels.
EURO @ 1.1513— The initial bias leans toward a decline, but the support level at 1.1410-20 is expected to hold, allowing for a recovery. Conversely, if there is a rise above 1.1625, it would create momentum for a move to 1.1690. A breach of the support level could drive it down to 1.1370.
GBP @ 1.3098— This week, we could witness some unpredictable moves in Pound Sterling. The important support level at 1.2985 is crucial. If it holds, it could encourage Cable to rise towards the 1.3170-80 range. A breakout past this level would lead it to target 1.3220. On the other hand, if it falls below the support level, the likelihood of testing 1.2870 will increase.
JPY @ 156.39— Following last week’s movement, the $/YEN pair may be poised for further gains if it remains above 155.10. However, it must surpass 157.90 to potentially trigger a larger advance towards the 160 range. Break of support level will push it towards 154.40.
Copyright Business Recorder, 2025
The writer is former Country Treasurer of Chase Manhattan Bank. The views expressed in this article are not necessarily those of the newspaper
He tweets @asadcmka
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