In the first week of November 2023, the currency and oil market was influenced by several economic factors. The US dollar (USD) faced a depreciation, losing most of its gains from the previous week. This decline followed the return of global stock markets to normal and a decrease in oil prices.
Fluctuations of the US Dollar and Its Impact on Interest Rates
Despite a 4% drop in Nvidia's stock due to investigations into its CEO, details show that the Nasdaq and S&P 500 indices are less than 2% below their closing levels on November 4. This situation indicates that last week's fluctuations are viewed more as a period of market anxiety rather than the beginning of a larger downturn.
The Consumer Price Index (CPI) for October is expected to increase by 0.3% compared to the previous month, which could provide further support for short-term dollar interest rates. Meanwhile, the headline CPI is also forecasted to be the same, in line with market consensus.
Declining Oil Prices and Their Impact on the Euro
Alongside the fluctuations of the dollar, oil prices have also continued to decline. As a result, the euro (EUR) has been significantly affected, and it appears that its price against the dollar is stabilizing in the range of 1.120 to 1.1250. Oil prices are expected to provide limited support for the euro due to improved expectations in the Middle East.
Analyses indicate that if energy prices continue to decline, the market may react to the European Central Bank (ECB) interest rate expectations compared to the Federal Reserve (Fed). This situation could lead to further fluctuations in exchange rates.
Given the current market situation, it is expected that the euro will not be able to quickly exit its current state and will continue to face challenges against the dollar. In this context, energy prices are expected to unpredictably impact the market.
