The dollar weakens for the first time in months as the Federal Reserve pauses its rate hikes.

Why you should care: The U.S. dollar has been very strong over the past 2 years, resulting in U.S. stocks yielding higher returns for foreign investors holding U.S. investments. However, that period might be over with the Fed pausing its rate hikes, which will dampen the strength of the U.S. Dollar. If you are an investor in U.S. stocks, now is the time to relook at your investments for any change of divestments.

The U.S. Dollar Index (DXY) weakened by 3.0% in the month of November 2023, Two developments have heavily influenced this. One, the Fed has paused its rate hikes, and investors are expecting U.S. interest rates to peak now. Two, inflation in the U.S. has continued to moderate with inflationary pressures now more under control by the Fed.

In terms of market expectations, they expect the DXY to weaken further to 102.8 in March 2024. Here are the futures contract projections by the market for you to take note of:

Weak global demand and lower-than-expected OPEC cuts, cut into lower crude oil prices

Why you should care: Crude oil prices are normally an indicator of the state of the global economy. A sharp drop this month might be a sign of recessionary pressures to come. Furthermore, this is also important to determine whether the bull run in energy stocks is over.

Brent crude oil prices declined by 4.9% in November 2023 due mainly to two reasons. One, the global manufacturing purchasing manager’s index (PMI) declined to 48.8 points in October 2023, indicating contraction from global manufacturing players. Two, the markets seem to be sceptical of the production cuts coming from OPEC. They seem to be calling OPEC’s commitment to cut more as many of the countries in OPEC seem to be unwilling to do so to support global crude oil prices.

Moving forward, Brent crude oil prices are expected to trade around US$77 to US$79 (WSJ)