Dollar declines, stocks climb amid growing indicators of a turning point

Speculation of the Federal Reserve approaching the end of its tightening cycle contributed to a weakened dollar and stock advancements in Asia. The US currency saw declines against all Group-of-10 peers following dovish remarks from Federal Reserve officials, reinforcing expectations that the central bank has concluded its interest-rate hikes. Emerging-market currencies reached a nine-month high, and Asian equities were on track for their highest close in two months.

European Central Bank officials scheduled to speak on Monday may offer insights into their own rate-hike plans. Traders are currently estimating a 30% chance of a first Fed rate cut in March after comments from Vice Chair for Supervision Michael Barr suggested the likelihood of the central bank concluding its tightening campaign. However, San Francisco Fed President Mary Daly emphasized uncertainty regarding inflation reaching the 2% target.

In the Treasury market, prices edged lower in Asia ahead of a US 20-year auction, providing insight into whether investors are confident the 2023 selloff is over. The Treasury market is poised to end a six-month losing streak with a monthly gain in November. Meanwhile, European equity futures showed little change, and US counterparts dipped slightly following the S&P 500’s climb above 4,500 on Friday.

The offshore yuan strengthened as the People’s Bank of China raised its daily reference rate to the highest since August. The decision to maintain benchmark lending rates by Chinese commercial lenders aligned with the central bank’s commitment to supporting stimulus spending through alternative means.

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Japan’s Nikkei 225 Stock Average reached its highest level since 1990, briefly surpassing its June intraday peak. Factors contributing to its 28% gains this year include recent yen weakness, solid company earnings, and corporate governance reforms.

Oil prices rose in anticipation of an OPEC+ meeting on supply that will impact market balances into 2024. Investors also monitored developments at OpenAI, where interim CEO Mira Murati reportedly planned to re-hire ousted predecessor Sam Altman, while the board chose former Twitch chief Emmett Shear as CEO.

In Argentina, libertarian candidate Javier Milei won Sunday’s presidential runoff, defeating Economy Minister Sergio Massa. Market reactions were not immediately evident due to the holiday. Xiaomi Corp. is set to announce earnings, and Nvidia Corp. will release results, with trading expected to become more subdued toward the end of the week due to the US Thanksgiving Holiday on Thursday.