What to Watch Next
Oil prices broke the key levels last week and continued to surge, while AI spending remains strong. This can keep the cost of business high and strengthen the case for rate hike in December.
The weak employment data and slow growth could limit further gains in Treasury yields. I think that the next inflation and jobs data will help to understand whether the Fed needs to raise rates again. The correction in oil prices will likely ease that pressure.
The next move in US dollar will likely depend on how expectations for the Fed compare with expectations for the ECB and the Bank of England. A break above 102.80 in the US dollar index could strengthen the recovery, but a break below 100.50 would weaken the outlook for the US dollar.
A break above 102.80 in US dollar index may keep the EUR/USD under pressure in the short term. But a break above 1.1265 in the EUR/USD may extend the pair to 1.1360. On the other hand, a break above 1.3430 in GBP/USD may open the way for a rally to 1.3650.
Read more: December Hike in Focus Ahead of Japan CPI
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