On Thursday, trading volumes in financial markets were low because of the Thanksgiving Day holiday in the United States. In Europe, key economic data on business and consumer sentiment was released, and the European Central Bank shared minutes from its October meeting. This week, the US Dollar weakened against several major currencies, showing a notable drop of 1.80% against the New Zealand Dollar. The US Department of Labor reported a decline in Initial Jobless Claims to 216,000 for the week ending November 22. Additionally, Durable Goods Orders rose by 0.5%, supporting a positive market outlook.

UK Economic Updates

In the UK, Finance Minister Rachel Reeves announced tax increases on savings, dividends, and property income, along with an extended income tax freeze. This led the GBP/USD to reach a month-high of 1.3270 before settling. The EUR/USD neared 1.1610, while the USD/JPY saw some midweek gains but began to drop early Thursday. Gold prices stayed above $4,150, driven by expectations of a possible rate cut from the Federal Reserve in December. Market sentiment continues to sway currency and commodity performance, displaying clear “risk-on” and “risk-off” trends. The market feels quiet due to the Thanksgiving holiday in the US, but this does not indicate a lack of direction. As liquidity returns next week, we expect the current risk-on sentiment to pick up speed. We are bracing for further weakness in the US Dollar in the coming weeks. This outlook largely stems from the increasing likelihood of a Federal Reserve rate cut in December. Recent mid-November data revealed cooling inflation trends, with the Consumer Price Index (CPI) dropping to 2.9%. The CME FedWatch Tool indicates an 85% chance of a rate cut in the next meeting, making a dovish Fed shift our main scenario.

Currency And Market Predictions

This environment favors currencies like the New Zealand and Australian Dollars, which have performed well against the US Dollar. We see opportunities to buy calls or take long positions on these currencies against the greenback. The S&P 500 has already risen over 6% this month, and we expect this trend to continue, supporting long positions in equity index futures. The British Pound received a short-term boost from the Autumn Budget, but this momentum may not last. The Euro’s potential for growth might also be limited, as the recent ECB minutes from October 2025 indicate hesitation to tighten policy because of slow growth. Thus, we prefer commodity currencies over European currencies to benefit from dollar weakness. Gold trading above $4,150 signals the market’s expectation for lower interest rates. As the costs of holding non-yielding assets decrease, gold becomes more appealing. We predict further gains for the precious metal, making long positions in gold derivatives a key strategy as we approach year-end. Create your live VT Markets account and start trading now.

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