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T3 Monthly Insights - Nov 2023

T3 Group


The U.S. dollar experienced its most significant monthly drop in a year, declining 3% from 106.88 to 103.50. This decline was attributed to expectations that the Federal Reserve might cut interest rates in the first half of the next year, following the cessation of rate hikes. The USD slide was temporarily halted by positive inflation news, with the core PCE price index rising 0.2% in October, resulting in a year-over-year increase of 3.5%, the lowest since April 2021 but still above the Fed's 2% target.


Across the Atlantic, both the euro and sterling strengthened against the weakened greenback. Eurozone inflation slowed more than expected in November, with the EUR closing the month 3% higher at 1.088. Sterling reached a more than two-month high of 1.2624, supported by unexpected growth in British companies in November.


The yen touched a year's low at 151.72 due to the Bank of Japan's (BOJ) persistent ultra-easy monetary policy. Prime Minister Fumio Kishida announced a new economic stimulus package worth over USD 110 billion in early November. BOJ board members expressed the need to maintain an ultra-loose monetary policy, emphasizing uncertainty in achieving the 2% inflation target.


Against the weakened U.S. dollar, the Aussie climbed to a more than three-month high of 0.6649, while the Kiwi gained 5% to close the month at 0.6155. Both the RBA and RBNZ kept cash rates unchanged. The Canadian dollar gained 2% against the USD, reaching a two-month high of 0.7409, supported by positive domestic job data. Bank of Canada Governor Tiff Macklem indicated that it's too early to consider rate cuts, emphasizing the need for clear evidence of sustainable inflation.


Gold prices rallied in November, reaching an all-time high of 2075.09 on December 1st. Federal Reserve Chair Jerome Powell's remarks boosted confidence in the completion of monetary policy tightening, increasing gold's appeal as a hedge. Concerns over the Israel-Hamas conflict further contributed to the rise in demand for gold as a safe-haven asset. Central banks' continued gold purchases and upcoming events like the Indian wedding season, Christmas, and Chinese New Year are expected to support gold prices.


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