Financial Markets Digest: Central Banks Awaited, Gold Shines, and Oil Soars

Investors around the world are holding their breath as central bank decisions take centre stage, overshadowing the ongoing Detroit strike and the looming threat of a government shutdown. Notably, gold is on a winning streak, and oil prices are surging, while currencies dance to the tune of economic data.

Key Factors for Today

• Central banks' decisions loom large, with a cautious eye on the Fed.
• The United Auto Workers (UAW) strike continues to weigh on market sentiment.
• Gold extends its rally as China lifts import restrictions.
• Crude oil reaches fresh November highs, eyeing triple-digit figures.
• Reserve Bank of Australia (RBA) minutes reveal a cautious stance on rate hikes.

Market Movers

• As the Federal Open Market Committee (FOMC) wraps up its two-day meeting, investors are anticipating the Fed's decision on interest rates. While expectations lean towards no change, any surprises could jolt markets.
• The ongoing strike against Detroit's major automakers by the UAW underscores labour market instability. This unrest has caused the 10-year Treasury yield to dip slightly and impacted the US dollar, allowing the EUR/USD pair to gain over 0.30%.
• China's decision to lift short-term restrictions on gold imports has provided a boost to the precious metal, culminating in a three-day winning streak. However, gold's trajectory remains influenced by the spectre of a government shutdown and the US dollar's fluctuations.
• Oil prices surged to a fresh November high, surpassing $92 a barrel. Market sentiment continues to reflect concerns about supply shortages, and the potential for triple-digit oil prices remains on the horizon.
• Minutes from the RBA meeting revealed deliberations about raising interest rates. However, concerns about economic slowdown, weakened domestic consumption, and contagion risks from China led to the decision to keep rates unchanged. The possibility of further tightening remains contingent on inflation trends.

Economic Calendar

• Euro Area Consumer Price Index (CPI) Inflation
• Canadian Consumer Price Index (CPI) Inflation
• European Central Bank's Elderson Speech
• Building Permits and Housing Starts Data Release
• New Zealand Dairy Trade Price Index
• Bank of Canada's Kozicki Speech
• American Petroleum Institute (API) Crude Oil Stock Change
• Japan Trade Balance

The Big News

Gold Glitters as China Eases Restrictions

China's central bank's decision to lift short-term curbs on gold imports has breathed new life into the precious metal. After the spread between Shanghai and London gold prices hit a record high, the easing of restrictions has allowed gold to reach over $1930/oz. With support near $1920 an ounce, gold's short-term momentum remains a focal point for traders.

UAW Strike's Impact on Markets

The United Auto Workers' strike against Detroit's leading automakers continues to be a source of concern. As the labour dispute persists, it has implications for both the labour market and broader economic sentiment. The strike's ripple effects have influenced the 10-year Treasury yield and the EUR/USD exchange rate.

Oil's Ascent and Triple-Digit Potential

The surge in oil prices, with a fresh November high beyond $92 a barrel, has captivated markets. The ongoing rise is attributed to concerns regarding potential supply shortages. If this trend continues and the $90 handle remains intact, triple-digit oil prices may become a reality.

RBA's Deliberations on Rates

The RBA's minutes reflect a cautious approach to interest rates. While the central bank considered rate hikes, concerns about economic headwinds and contagion risks tempered their decision. The RBA is keeping a watchful eye on inflation as a potential trigger for further tightening.