Gold Recorded Gains for Second Consecutive Weeks as Dollar Suffer From Next Fed Move

Lebanese Forex Market

The Lebanese Pound (LBP) remained steady within the new official rate of USD/LBP 15,000 by November 24, 2023.

The Lebanese exchange rate has showed stability over the past month, hovering consistently around 89,700 USD/LBP. This follows a prolonged period of depreciation that began in 2019, marking a notable departure from the previous trend. The current steadiness could be attributed to the halt of the Sayrafa platform as the ending of BDL’ intervention unto the market has cut opportunities for speculation, potentially allowing the Lebanese currency to find a more realistic value in the parallel market, in addition to strict control over the money stock. Despite this relief, the outlook remains precarious due to persistent uncertainty surrounding Lebanon’s future and the broader regional context.

As for the Euro/LBP currency pair, the Euro appreciated against the dollar-pegged LBP with the currency pair going from last week €/LBP 16,251  to €/LBP 16,357.50 by November 24, 2023. The Nominal Effective Exchange Rate (NEER) of the Lebanese pound slightly increased by 0.04% standing at 239.99 points on November 24, 2023.

International Forex Market

The USD Index (DXY) dropped to a low of 103.737 by November 24, 2023 despite a decrease in initial jobless claims potentially boosting the green currency position against its peers, reinforcing a robust demand environment, and complicating the battle against inflation. Meanwhile, markets are grappling with the idea that the Fed might have concluded its actions towards its interest policy.

Across the Atlantic, Euro currency got a slight lift from better-than-expected Eurozone PMI data, while the European Central Bank’s latest meeting details did not provide fresh insights. EUR/USD is stabilizing around 1.09006, 0.61% higher than the previous week. The upcoming German Q3 GDP and IFO Survey on Friday, along with ECB President Christine Lagarde’s speech in Frankfurt, are notable events, but no monetary policy views are anticipated from Lagarde. Regarding the UK, the British pound showed strong performance driven by favorable UK PMI data. GBP/USD reached a two-month peak before experiencing a slight retreat to 1.2530.

For other currencies in Europe, the USD/CHF edged lower by 0.53% by the end of this week to stand at USD/CHF 0.8837 despite the growing geopolitical tension in the Middle East, which would usually benefit the safe haven currency especially the Swiss Franc. Additionally, the USD/CNY pair depreciated by 1.23% to stand at USD/CNY 7.1540 while the USD/JPY pair saw a rebound by end of this week returning to the 149.60 ranges and affirming its recent recovery but ended the session lower on a weekly basis on Friday November 24, 2023.

Elsewhere, The USD/CAD touched a weekly low around 1.3650 before recovering to the 1.3692 region. Meanwhile, despite a decline in Australian PMI to multi-month lows, the AUD/USD saw an increase, stabilizing around 0.6564 in a relatively calm market.

Commodities

Gold is consolidating its second weekly gains, nearly touched the $2,000 during the weeks’ sessions, and ended the week 0.32% higher at $1,992.5/ounce on Friday November 23, 2023. In fact, the FOMC minutes released on Tuesday adopted a more hawkish stance with Wednesday’s positive US labor market and consumer sentiment data; there are speculations that the Fed might maintain higher interest rates for an extended period. Meanwhile, the stronger than expected jobs data did not change the view that the labor market is slowing in the US amid higher rates, which pushed the non-yielding gold price up at the week’s end.

Crude oil registered their strongest recovery since a while with gains of around 5% ending the week at $81.51/barrel. The rally in oil prices was mainly driven by the fresh sanctions package by the EU on Russian Oil and it continued as speculation around further OPEC cuts grow as they are looking to maintain stability and keep oil prices above the $80/barrel mark, despite the recent postponement of the OPEC+ meeting.