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### Major Global Currencies Poised to Extend Uptrend as Dollar Weakens

By Vidya Ranganathan

SINGAPORE, Nov 6 (Reuters) – Major global currencies are holding steady at the beginning of this week, indicating the potential for an extension of last week’s uptrend. The recent decline in the dollar, prompted by the Federal Reserve’s dialing down of hawkish rhetoric, has fueled expectations of further gains in other currencies.

The dollar index remained flat at 105.11, while the euro traded at $1.0726. Last week, the dollar index experienced its largest drop since mid-July, falling over 1% and hitting a six-week low.

World stocks also had a strong performance, marking their strongest week in a year, as market participants increasingly believed that the Fed was finished raising interest rates. Other indicators, such as weaker U.S. jobs data, soft manufacturing numbers from various regions, and a decrease in long-dated Treasury yields, further weakened the dollar. Consequently, rallies were observed in sterling, the Australian dollar, and the yen recovered from its weaker position against the US dollar.

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### Market Analysts’ Views Differ on Dollar’s Future

Tina Teng, a market analyst at CMC Markets in Auckland, predicts that the current trend of dollar weakness and currency strength will continue throughout November. According to Teng, the expectation for the Federal Reserve and other central banks to end the rate hike cycle sooner is viewed as positive news, causing market participants to find favor in non-dollar currencies.

However, analysts at J.P. Morgan Securities urge caution and suggest that dollar bears should moderate their enthusiasm. They argue that while the pillars of U.S. dollar strength have weakened, they have not disappeared entirely and are likely to resurface in the medium term.

Moreover, J.P. Morgan analysts believe that a sustained decline in the dollar requires signs of improvement in the euro zone, China, and other regions, which they consider to be still vulnerable. Recent manufacturing surveys from China, as well as Europe’s GDP and inflation data, seem to support this viewpoint.

### Treasury Yields and Market Expectations

Last week, Treasury yields experienced a slump amid softer U.S. jobs and manufacturing data. The decline was amplified by the U.S. government’s lower estimates for refinancing and long-dated debt auctions. As a result, yields on 2-year notes dropped 25 basis points in around two weeks, while 10-year yields reached five-week lows at around 4.59%. The yield curve remained significantly inverted towards the front end.

Considering these developments, futures markets now indicate a 90% probability that the Federal Reserve has finished raising interest rates, with an 86% likelihood of the first policy easing occurring as early as June.

Furthermore, market expectations suggest an approximately 80% chance that the European Central Bank will cut rates by April, while the Bank of England is expected to ease in August.

### Japanese Yen and Sterling’s Performance

The Japanese yen weakened against the dollar by 0.16%, trading at 149.60 per dollar. Market experts, including CMC Markets’ Tina Teng, believe that the recent dollar turnaround and the yen’s recovery from last week’s lows indicate that Japanese authorities may not need to intervene in the currency at this stage.

On the other hand, the British pound remained steady, trading at $1.2368. The upcoming release of Britain’s GDP data for the fourth quarter will likely impact sterling’s performance. Although the currency rallied strongly last week, which caught many investors who had shorted the currency by surprise, it still remains down approximately 6% over the past four months.

### The Impact on Gold and Bitcoin

The combination of the dollar’s decline and lower yields has contributed to support for gold, which is currently trading at $1,990, reaching striking distance of its recent five-month peak at $2,009.

In the cryptocurrency market, bitcoin has risen by 1.23% and is now valued at $35,057.20. The anticipated end of central banks’ tightening cycles has provided a boost to this risky asset. Moreover, market attention has shifted toward the potential introduction of new spot bitcoin exchange-traded funds (ETFs), which could open up the market to a broader range of investors. Although no such product has been approved yet, several firms have filed applications.

In summary, the current market environment presents both opportunities and challenges for investors and analysts. Leveraging advanced technologies like the AI legalese decoder can assist professionals in processing vast amounts of information quickly and accurately. By providing comprehensive analysis and translating complex legal jargon into easily understandable language, the AI legalese decoder supports decision-making processes and enhances overall market understanding.

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