* Dollar turns lower on Trump’s Treasury Secretary pick, Treasury yields plunge

* Gold, bitcoin fall over 3%, oil over 2.5% on Israeli-Hezbollah ceasefire reports

* Wall Street higher, Russels and Dow hit fresh record highs after Bessent nomination

* German business confidence falls as eurozone growth concerns widen

FX: USD fell back after last week’s upside break topped 108.07. The long-term top from October 2023 sits at 107.34. It’s US Thanksgiving on Thursday so bond and stock markets close early. Liquidity will be thin on Friday, with the release of the Fed’s favoured inflation gauge released on Wednesday. We discuss the dollar below.

EUR outperformed after breaking down to a low at 1.0331 on Friday. The October low from 2023 is 1.0448. Soft eurozone PMI releases – especially the drop in the services component – lifted bets on a 50bps December ECB rate cut and took the major to the lowest levels since 2022. Germany’s Ifo survey weakened more than expected in November. That again reflected subdued growth prospects amid heightened uncertainties abroad as well as at home following the recent collapse of the German government.

GBP outperformed all majors except EUR and CHF. BoE’s Lombardelli first speech since joining the bank earlier this year emphasised caution in easing rates amid signs that wage growth trends remain sticky. The remarks follow similarly cautious comments from Governor Bailey last week. The MPC is not expected to cut rates next month.

USD/JPY had a relatively quiet day printing a small doji. Prices sit just above the 50-day SMA ay 154.22 and a Fib level (61.8%) of July-September move down at 153.40. The 10-year Treasury yield fell sharply. Potential fiscal stimulus in Japan is keeping odds raised of a BoJ hike in December.

AUD struggled at its 50-day SMA at 0.6545. Buoyant risk sentiment didn’t really boost the commodity currencies. USD/CAD held above the August spike high at 1.3946. The loonie underperformed on weaker oil, making limited progress on the softer greenback.

US Stocks closed in the green with the Dow and Russell small cap index making new all-time highs. The S&P 500 settled 0.30% higher at 5,987. The tech-heavy Nasdaq 100 added 0.14% to finish at 20,805. The Dow closed up 0.99% at 44,737. Real estate and consumer discretionary led the gains, while energy was the big laggard, off over 2%, with tech the only other sector underwater, down 0.35%. The S&P 500’s latest quarterly profits are tracking more than 8% higher from a year earlier with the earnings nearing its end.  

Asian stocks: Futures are in the green. Asian equities were mostly higher to kick off the week.  The ASX 200 saw outperformance in real estate amid lower yields. The Nikkei 225 briefly topped 39,000 on the incoming stimulus package. The Hang Seng and Shanghai Composite were muted in a narrow range.

Gold plunged, falling for the first time in six sessions.  The dollar and yields dropped, but geopoltical tensions eased after reports of a ceasfire between Israel and Hezbollah.

Day Ahead – US Treasury Secretary pick and Fed Minutes

President-elect Trump’s selection of Scott Bessent as Treasury Secretary caused market ructions. He is seen as more market-friendly, so pro-growth, hawkish on the Federal deficit and favours a gradualist approach to tariffs.  Bessent is also viewed as a ‘voice of reason’ amid the Trump’s more aggressive policy initiatives. That all helps risk assets and lowers haven demand for gold and the dollar. That said, this won’t change the recent solid US data which contrasts heavily with other regions like the eurozone.

The FOMC minutes are released later today, rather than on a Wednesday due to the Thanksgiving holiday. They may be seen as stale given recent data and commentary. The former saw in line CPI but hotter PPI. Fed Chair Powell recently said rate setters do not need to be in a hurry to cut rates. Any big hints to a changing of the balance of risks, in relation to a cooling in the job market may direct price action in the near term.

Chart of the Day – New highs in the Dow

A fifth day of consectuive gains saw the Dow Jones Industrial Average push north to new record highs. The Bessent pick pleased stock bulls. Some commentators are talking about TINA again but in a slightly different context to recent times. ‘There Is No Alternative’ has previously been used to describe stocks generally being the only asset class to buy. Now it refers to US equities due to US exceptionalism and Trump unleashed. America is sucking growth away from the rest of the world and this contrasts sharply, as we have said, with other regions. What will change this current overwhelming theme for endless record highs in US stocks?