Markets showed notable volatility on Monday, likely influenced by the announcement of Scott Bessent as the upcoming U.S. Treasury Secretary nominee, while traders also digested mixed economic data and geopolitical developments.

What were the key drivers moving financial markets today? Let’s dive into the latest updates!

Headlines:

• U.S. Treasury yields declined following Scott Bessent’s Treasury Secretary nomination late Friday
• New Zealand Overseas merchandise trade: October 2024: -NZ$1.54B (-NZ$2.0B forecast; -NZ$2.15B previous)
• New Zealand trade deficit narrowed to NZ$1.54B in October (NZ$2.0B forecast, NZ$2.15B previous)
• German Ifo Business Climate declined to 85.7 in November (86.3 forecast, 86.5 previous)
• Bundesbank’s Nagel suggests German growth likely to stagnate in Q4 2024
• Swiss Non-Farm Payrolls rose by 1.2% year-on-year to a record 5.528M in Q3 2024 vs. 5.5M previous
• BOE’s Lombardelli advocates for “gradual” rate cuts amid weaker growth signs
• Bank of England Swati Dhingra sees uncertain outlook due to geopolitical tensions, inadequate data and restrictive policy
• Chicago Fed National Activity Index fell to -0.40 in October from -0.27 in September
• Dallas Fed Manufacturing Index slightly improved to -2.7 from -3.0, below -1.8 forecast
• Canadian business survey shows 37.3% expect labor obstacles; 71.6% optimistic on 12-month outlook
• Canada Manufacturing Survey shows 1.3% m/m advance for October (-0.6% forecast)
• Oil prices fell on Monday on signs that Israel is potentially days away from a cease-fire agreement with Lebanon’s Hezbollah

Broad Market Price Action:

Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView

The week began with significant moves across asset classes, primarily driven by the late Friday announcement of Scott Bessent as the upcoming U.S. Treasury Secretary nominee. This appointment likely reduced concerns about aggressive trade policies, supporting both bond and equity markets while weighing on the dollar.

Gold prices retreated as reports emerged suggesting Israel may be approaching a cease-fire agreement with Hezbollah, likely reducing geopolitical safe haven flows. This development also likely contributed to crude oil’s decline during the session.

Bitcoin faced notable selling pressure, possibly influenced by both the Bessent nomination and reduced geopolitical tensions in the Middle East.

Sentiment indicators continued to signal potential economic slowdown, with Germany’s Ifo Business Climate coming in below expectations and manufacturing surveys from both Chicago and Dallas Fed showing weakness.

These data points may have reinforced the cautious tone in markets, with exception to the equity markets that seem to be mainly influenced by the idea of lower odds of the U.S. going into an all-out trade war with China.

FX Market Behavior: U.S. Dollar vs. Majors:

Overlay of USD vs. Major Currencies Chart by TradingView

The U.S. dollar experienced a sharp decline at the week’s opening, primarily reacting to the Bessent nomination news. The selection of a candidate viewed as potentially moderating trade policy stance appears to have taken some momentum out of the dollar’s recent rally.

After the initial drop, the greenback traded sideways through Asian and London sessions before seeing another leg lower as U.S. traders entered the market, likely continuing to price in Friday’s after-market news.

The dollar did manage to recover some ground ahead of the London close, possibly due to profit-taking and/or capital flows influenced by growing economic growth concerns (possibly sparked by Dallas and Chicago Fed business survey updates) and improving geopolitical developments regarding the potential Israel-Hezbollah cease-fire agreement.

Upcoming Potential Catalysts on the Economic Calendar:

• ECB McCaul Speech at 10:00 GMT
• BoC Mendes Speech at 13:20 GMT
• Canadian Wholesale Sales MoM Prel at 13:30 GMT
• U.S. House Price Index MoM/YoY at 14:00 GMT
• S&P/Case-Shiller Home Price data at 14:00 GMT
• U.S. New Home Sales at 15:00 GMT
• CB Consumer Confidence at 15:00 GMT
• Richmond Fed Manufacturing/Services indices at 15:00 GMT
• FOMC Minutes at 19:00 GMT
• API Crude Oil Stock Change at 21:30 GMT

All eyes will likely be on the U.S. Consumer Confidence update and the FOMC meeting minutes later today. The CB U.S.  Consumer Confidence has been a short-term market mover in recent releases, as expected with any data giving fresh signals of consumer spending (which is a major driver of economic growth in the U.S.) and inflation.

The FOMC meeting minutes tends to be a hit or miss on whether it’s a market impact or not given that most of the pertinent sentiment on policy outlook is given by the Fed Chair at the meeting press conference and Fed members public comments after the event. But it’s always a good idea to be on top of this event in case there are surprises.

Make sure you’re glued to the tube in case we see increased volatility during their events, and don’t forget to check out our Currency Correlation tool when taking any trades!