Oil News: Is the Market Set for Losses as China's Demand Weakens and OPEC+ Cuts Lag?.Oil prices fall 1.99% as weak Chinese demand and strong dollar weigh on crude futures. Traders eye OPEC+ cuts and Fed policy for future price direction.

US Dollar Forecast: DXY Holds Firm Near 2-Year High as Fed Signals Fewer 2025 Cuts.DXY rises 0.81% for the week as the Fed signals fewer 2025 rate cuts, Treasury yields climb, and inflation concerns persist.

The Bank of Jamaica cut its monetary policy rate by 25 basis points to 6% in December 2024, continuing its easing cycle that began earlier in the year. This decision is based on inflation staying within the target range, with headline inflation declining to 4.3% in November 2024. Despite challenges such as adverse weather affecting prices, inflation is expected to remain stable. The Bank acknowledged risks, such as potential policy changes from Jamaica’s trading partners, but remains committed to keeping inflation low and stable while monitoring the trajectory of future economic conditions.

In New York, the Dow Jones Index went up by 510 points or 1.21 percent on Friday. Top gainers were Nvidia (2.46%), UnitedHealth (2.37%) and Goldman Sachs (2.17%).

The Ibovespa gained 0.8% to close at 122,102 on Friday, recovering from early losses and reducing the São Paulo exchange’s weekly decline to 2%. The central bank’s aggressive interventions, including a $3 billion spot auction today, have brought total currency market interventions to $23.75 billion since last week, helping to stabilize the Brazilian real. However, these actions also underscored growing fiscal risks, amplified by the Senate’s approval of a diluted PEC that weakened the government’s spending cuts and raised concerns over fiscal consolidation. Major banks led the rebound, with Banco Santander, Banco do Brasil, Itaúsa, and Bradesco rising 0.9% to 2.1%. Strong performers included Localiza, Rede D'Or, B3, Natura, Hypermarcas, and Lojas Renner, which surged 2.3% to 4.9%. In contrast, consumer non-cyclicals and industrial stocks faltered, with Ambev dropping 3.8% and WEG falling 1.9%.

The S&P/TSX Composite Index gained 0.8% to close at 24,600 on Friday, snapping a six-day losing streak and partially trimming some of its 2.7% weekly plunge. Canadian stocks rebounded alongside their US counterparts, tracking a sharp recovery in Wall Street’s major indices as investors reassessed the Federal Reserve’s policy outlook. North American equities recovered following a softer-than-expected core PCE inflation reading, fueling hopes for less restrictive Fed policy. Bond yields fell, boosting interest rate-sensitive sectors like technology and financials. Shopify was a standout performer, up 1.7%, while RBC, Brookfield, and TD Bank rose between 0.6% and 1.4%. Gold-linked stocks also outperformed, with Agnico Eagle, Barrick Gold, and Franco-Nevada gaining 0.8% to 1.4%, driven by higher gold prices. In contrast, the energy sector faced continued pressure, with Suncor and Imperial Oil dropping 0.4% and 1.5%, respectively, amid concerns over potential US tariffs.

US stocks bounced back on the last triple witching day of the year, with the S&P 500 up 1%, the Nasdaq rising 0.8% while the Dow gained 497 points. The rally followed cooler-than-expected inflation data, with November’s PCE index showing a 2.4% year-over-year increase, slightly below expectations. This helped alleviate market concerns sparked by the Federal Reserve’s forecast of fewer rate cuts in 2025. Sentiment was also weighed down by the threat of a government shutdown and global market pressure from tariff threats. The healthcare sector took the spotlight after Novo Nordisk’s new obesity drug missed targets in its test, driving the pharmaceutical giant’s ADRs to plunge 17.7%. In turn, equities for competitor Eli Lilly gained 1.4%. Considering the week, all the three major averages sank 2.3% with the Dow booked its worst week since 2023.

USD/JPY retreats to 156.50 after reaching multi-month highs on softer US PCE data.The USD/JPY pair pulled back from its highest levels since July, retreating to 156.50 following the release of US Personal Consumption Expenditure (PCE) data. Softer inflation metrics, coupled with insights from the Federal Reserve's recent interest rate decision, moderated bullish momentum for the US Dollar.

Natural Gas Price Forecast: Long Term Bullish Reversal Triggers.Natural gas rallies above key resistance, confirming bullish reversal signals on multiple time frames and opening the door for extended gains toward 4.33.

US Dollar edges lower after soft PCE data.The US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, took a hit after soft Personal Consumption Expenditures (PCE) data was released during the European session. Markets are also assessing political woes in the US, which soured market sentiment.

The unemployment Rate in Luxembourg rose to 5.9% in November 2024, from 5.7% a year earlier. It marked the highest reading since May 2021 as with 18,625 jobseekers registered, marking a 6.8% increase from the previous year. The rise was particularly noticeable among long-term unemployed individuals, those over 30, and highly educated workers. The number of new registrations dropped slightly by 5.2%, with fewer jobseekers joining the ADEM compared to November 2023. Additionally, the number of individuals receiving full unemployment benefits rose by 11.3%, highlighting a growing demand for support in the job market.

Brent crude oil futures settled slightly higher at $72.9 per barrel on Friday, recovering some earlier losses but still posting a 2.5% decline for the week. The recovery came as the US dollar softened from two-year highs, with data indicating cooling inflation just two days after the Federal Reserve’s interest rate cut. China’s energy outlook added to market uncertainty, as Sinopec predicted crude imports could peak by 2025 and oil consumption by 2027. These forecasts contributed to the weekly losses in global oil benchmarks. OPEC+ downgraded its 2024 demand growth outlook for the fifth consecutive time, highlighting the need for supply discipline. Geopolitical tensions increased as the G7 explored stricter measures on Russian oil price caps.Additionally, President-elect Trump raised the possibility of tariffs on the EU if it doesn’t address trade imbalances, particularly in U.S. oil and gas.

WTI crude oil futures gained 0.1% to close at $69.46 per barrel on Friday, recovering some earlier losses but still posting a 3% decline for the week. The recovery came as the US dollar softened from two-year highs, with data indicating cooling inflation just two days after the Federal Reserve’s interest rate cut. China’s energy outlook added to market uncertainty, as Sinopec predicted crude imports could peak by 2025 and oil consumption by 2027. These forecasts contributed to the weekly losses in global oil benchmarks. OPEC+ downgraded its 2024 demand growth outlook for the fifth consecutive time, highlighting the need for supply discipline. Geopolitical tensions increased as the G7 explored stricter measures on Russian oil price caps.Additionally, President-elect Trump raised the possibility of tariffs on the EU if it doesn’t address trade imbalances, particularly in U.S. oil and gas.

Argentina's economic activity estimator dropped by 0.7% year-on-year in October 2024, following an upwardly revised 2.5% decline in September, and better than the anticipated 2.2% drop. Key drivers included slower agriculture (2.3% vs. 5.2% in September) and mining and quarrying grew faster (7.4% vs. 7.8%), while the contraction accelerated for transportation (-0.6% vs. -0.1%). Meanwhile, contractions slowed in construction (-14.5% vs. -15.0%), contraction in utilities (-0.4% vs. -5.2%), and manufacturing (-2.3% vs. -5.9%). Seasonally adjusted data showed a 0.6% increase, while the trend-cycle indicator increased by 0.2%.

Kosovo’s trade deficit narrowed to EUR 473 million in November 2024, down from EUR 517.3 million in the same month the previous year. Exports of goods totaled 93.9 million Euros, reflecting a 22.8% increase compared to November 2023. Exports to the EU reached 33.6 million Euros, accounting for around 35.8% of total exports, and showing a 15.0% growth. Germany was the largest recipient of Kosovo’s exports, making up 11.3%, followed by Italy at 3.2% and the Netherlands at 2.7%. Imports, on the other hand, amounted to 566.9 million Euros, a decrease of 4.5% year-over-year. Kosovo’s imports from the EU were valued at 242.5 million Euros, or 42.8% of total imports, marking a 6.3% increase. The primary sources of imports were Germany (14.3%), Italy (5.1%), and Greece (3.7%).

Argentina recorded a current account surplus of USD 1.401 billion in Q3 2024, a sharp reversal from the USD 6.05 billion deficit in the same period last year. The goods account shifted dramatically to a USD 5.37 billion surplus, up from a USD 1.37 billion deficit in Q3 2023. Meanwhile, the services gap slightly narrowed to USD 1.61 billion from USD 1.68 billion. Additionally, the primary account deficit narrowed to USD 2.73 billion from USD 3.46 billion, while the secondary account surplus fell to USD 363 million from USD 467 million, highlighting overall improvement despite some pressures.

The Central Bank of Colombia reduced its benchmark rate by 25 basis points to 9.5% in December, less than the expected 50bps reduction, with five board members supporting the move, while one favored a 50bps cut and another a 75bps reduction. Annual inflation eased to 5.2% in November from 5.4% in October, though core inflation held at 5.4% due to persistent service inflation. GDP expanded by 2.0% in Q3, driven by a 20.3% surge in gross capital formation, lifting year-to-date growth to 1.6%. However, recent exchange rate volatility, stemming from tighter global financial conditions, slower expected Fed rate cuts, and Colombia’s fiscal uncertainty, has raised inflationary risks, limiting room for aggressive rate cuts. The labor market remained stable, with unemployment below pre-pandemic levels. The central bank emphasized that future rate decisions will depend on incoming economic data while balancing inflationary pressures and growth recovery.

Canada’s 10-year government bond yield fell to 3.28%, retreating from a monthly high of 3.345% on December 19, tracking US Treasury yields lower as softer-than-expected US inflation data strengthened the case for further Federal Reserve rate cuts. Domestically, November’s trimmed-mean core inflation held at 2.7%, exceeding the 2.5% forecast, limiting the Bank of Canada’s flexibility to lower rates further and deepening economic headwinds. The government’s fiscal update revised GDP growth projections to 1.7% for 2025 (down from 1.9%) and 2.1% for 2026 (down from 2.2%), reflecting slowing momentum. The BoC’s recent 50bps rate cut to 3.25%, amid rising unemployment and sluggish growth, underscores its challenge in balancing economic stagnation and persistent inflation. Meanwhile, Finance Minister Chrystia Freeland’s resignation over policy disagreements with Prime Minister Trudeau has amplified uncertainty, given her critical role in managing trade relations and fiscal stability.

The CAC 40 fell 0.3% to close at 7,275 on Friday, extending sharp losses from the previous session and hitting its lowest level in nearly three weeks, as investor sentiment soured amid concerns over the potential impact of a second Trump administration, particularly the threat of imposing tariffs on the European Union unless member states increase purchases of American oil and gas. These remarks compounded worries over the interest rate outlook, further unsettling markets. On the domestic front, French producer prices surged by 3.2% month-over-month in November 2024, the highest increase since March 2022. Most stocks ended in negative territory, with Thales leading the losses, shedding 1.4%. Airbus and ArcelorMittal also declined, falling 1.1% and 0.9%, respectively. However, Vivendi, Teleperformance, and Renault helped limit the decline, with gains ranging from 1.2% to 2.4%. For the week, the CAC 40 posted a significant loss of 1.7%, marking its second consecutive weekly decline.

European stocks trimmed earlier losses but still closed lower on Friday, benefitting from more optimistic US equity markets in the European afternoon as investors reconsidered the impact of fewer rate cuts by the Federal Reserve. The Eurozone’s STOXX 50 eased 0.2% to close at 4,870, a 2% drop on the week. On the other hand, the STOXX 600 sank 0.8% to close at 503, pressured by the plunge for Novo Nordisk, the largest European company by market capitalization. The pharmaceutical giant closed 21% lower after test results showed that its new obesity drug missed the targets set by the company. Stocks were also pressured by threats of tariffs from US President-elect Trump should EU members not increase their purchases of oil and LNG from US companies. Financial services providers led the losses with ING, Munich Re, and Nordea dropping more than 1.6% each. On the other hand, consumer cyclicals limited the losses, with Inditex, Ferrari, and Volkswagen adding more than 1% each.

The FTSE MIB trimmed sharp initial losses to close marginally down at 33,766.3 on Friday, its lowest since early December and marking a second consecutive day of declines. Traders reassessed the Fed's policy outlook after a softer-than-expected increase in the core PCE price index, the Fed’s preferred gauge of underlying inflation, during November. Meanwhile, market participants reacted to US president-elect Donald Trump's tariff threat to the EU, while also assessing the political turmoil in the US. Among individual stocks, Saipem (-6.1%) was the worst performer, hit by profit taking and the declines in crude oil. Telecom Italia also faced pressure (-3.7%), on the day of the first examination of the 700 million offer presented by the Treasury and Retelit for Sparkle.On the upside, Amplifon and Cucinelli led the gains, up 1.6% and 1.5%, respectively. For the week, the FTSE MIB shed about 3.2%.

Rice decreased to a 35-month low of 14.04 USD/cwt. Over the past 4 weeks, Rice lost 7.35%, and in the last 12 months, it decreased 20.26%.

Natural Gas, WTI Oil, Brent Oil Forecasts – Oil Gains Ground As Dollar Pulls Back.Oil markets are moving higher as U.S. dollar declined from yearly highs.

El Salvador's economy grew by 1.58% in the third quarter of 2024, slightly accelerating from an upwardly revised 1.53 percent growth in the previous period. Net foreign demand slowed (7.26% vs. 20.12% in Q2), while imports plummeted (1.75% vs. 7.77%). From a spending perspective, gross fixed capital formation rebounded sharply (7.84% vs. -3.61%), while growth in household consumption (1.65% vs. 3.0%) and government spending (-1.55% vs. 0.21%) decelerated. On a quarterly basis, the economy contracted by 0.2%, down from the downwardly revised 0.13% growth in the previous quarter.

The FTSE 100 pared early losses to close slightly down at 8,085 on Friday, notching a second consecutive session of declines and a 2.6% drop for the week. Concerns over slower rate cuts by the Federal Reserve, signs of economic stagnation in the UK, and the looming threat of a US government shutdown all weighed on investors' minds. Market sentiment was further undermined by a warning from US President-elect Donald Trump regarding potential tariffs on the European Union. In the UK, the latest data revealed a smaller-than-expected increase in retail sales, while borrowing figures came in better than anticipated. On the corporate side, Severn Trent and United Utilities Group continued to head up the fallers of the day, down 2.3% and 1.7%, respectively. Contrastingly, Frasers Group led risers, up 2.8% as shareholders appeared to breathe a sigh of relief at the end of a spat with Boohoo Group.

El Salvador reported a trade deficit of USD 837.35 million in November 2024, slightly widening from the USD 817.23 million gap recorded in the same month the previous year. Exports soared by 10.39% year-over-year to USD 555.44 million, driven by an increase of 21.23% in the export of consumer goods, particularly coffee (73.77%), non-traditional goods (10.97%), and manufactured goods (5.79%). Meanwhile, imports also increased by 5.48% to USD 1,392.78 million.

US stocks recovered from early losses to trade firmly higher on Friday as markets reconsidered the impact that fewer rate hikes by the Federal Reserve next year may have on corporate returns. All three major indices recovered from 1% losses to hover 1.5% higher, tracking the sharp rebound for Treasury securities. The jump marked a reversal from the equity selloff earlier in the week after FOMC members projected fewer rate cuts by the central bank next year, reflecting an overreaction to the hawkish signals. The rebound was further supported by bets that the Fed may still make policy less restrictive after a softer-than-expected increase in the core PCE price index during November, the Fed’s preferred gauge of underlying inflation. The healthcare sector took the spotlight after Novo Nordisk’s new obesity drug missed targets in its test, driving the pharmaceutical giant’s ADRs to plunge over 20%. In turn, equities for competitor Eli Lilly surged 5%.

The Weekly Bottom Line: Fed Signals a More Cautionary Stance on Rate Cuts Next Year.What a year this week was! The show stealer was Minister Freeland's surprise resignation the day she was set to deliver the Fall Economic Statement (FES).

October GDP to Look Marginally Stronger After Slew of Weak Data.The final major data point from Statistics Canada in 2024 will be Monday's gross domestic product release for October, which will be the last GDP print before the Bank of Canada's Jan. 29 meeting. We look for a 0.2% increase that would be the strongest monthly gain since April, and firmer than the 0.1% advance estimate a month ago.

Weekly Focus – Hawkish Christmas Present from US Federal Reserve.The tradition of central banks hosting meetings just before Christmas continued this year with policy decisions in the US, Japan, UK, Norway, and Sweden. The largest present came from the US Federal Reserve in the shape of a significant hawkish surprise.