Financial Markets React to U.S. Inflation Data as Dollar Weakens and Commodities Surge
Financial markets witnessed significant movements during trading today, Friday, as the U.S. Consumer Spending Index (the preferred inflation measure for the Federal Reserve) was released, showing a kind of slowdown during the past November.
In this context, the economic data released today, Friday, revealed that the Federal Reserve's preferred inflation index remained stable at 2.8% year-on-year in November, lower than market expectations of an increase to 2.9%. This performance reflects a calming of inflationary pressures in the U.S. economy.
Here’s a look at the performance of financial markets:
Impact of Consumer Spending Data on the Dollar Index
The U.S. dollar fell significantly following the release of the Federal Reserve's preferred inflation data, with the Dollar Index dropping to 107.63 points, down by 0.73%. This decline was a result of strengthened expectations for a substantial cut in U.S. interest rates next year, which reduced the dollar's appeal in global markets.
Rising Gold Prices Due to Dollar Weakness
Gold prices benefitted from the weakness of the U.S. dollar, increasing by about $32 to settle at $2,627 an ounce. This rise is driven by increased investment demand for the precious metal as hopes grow for a future reduction in U.S. interest rates, enhancing gold’s appeal as a safe haven.
Bitcoin Gradually Recovers with Strengthened U.S. Rate Expectations
Bitcoin saw a significant drop during the early hours of trading today, falling to levels around $91,000. However, the cryptocurrency managed to gradually recover following the release of the Federal Reserve's preferred inflation data, which bolstered expectations for a U.S. rate cut in 2025. Currently, the digital currency is trading near $98,000.
Oil Prices Rise on Demand Concerns and Supply Shortages
On another note, oil prices recorded a slight increase due to bolstered expectations for U.S. interest rate cuts and Moscow's decision to extend the oil export ban to countries complying with price caps. West Texas Intermediate crude contracts rose by 0.28%, reaching $69.36 per barrel.
Strong Gains in U.S. Stock Markets
U.S. stock markets experienced strong gains during today’s trading, with the Dow Jones Industrial Average rising by 1.69% to reach 43,058.54 points. Meanwhile, the S&P 500 Index increased by 1.61% to 5,961 points. The NASDAQ Index saw an increase of 1.16%, reaching 19,177 points.
These movements reflect the market's response to the Federal Reserve's preferred inflation data and the expected monetary policy outlook for 2025, amid anticipation of further signals from the Federal Reserve regarding future interest rates.
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Market Summary: Strong Declines Except for the Dollar Following Federal Decisions!