The anticipation is over, Election Day has come and gone, and the United States has officially announced its 47th president. President-elect Donald J. Trump has returned to power, becoming the second individual in U.S. history to serve two non-consecutive terms. While this significant political shift marks the end of a challenging four-year period, it is important to note that the current administration will remain in office for nearly three more months. The immediate aftermath of the election leaves many questions unanswered, and it will take time before the full implications become clear.

Beyond U.S. borders, uncertainties persist despite some signs of optimism. The geopolitical landscape remains uncertain, particularly concerning the ongoing conflict in Ukraine and rising tensions in the Middle East. These factors continue to influence global market sentiment.

Looking ahead, the upcoming week may not be packed with economic data releases, but several key reports are worth monitoring, especially following last week’s Federal Reserve meeting. Inflation data from the U.S. and economic activity indicators from China are set to take center stage and could provide important insights.

Key Economic Data to Watch

In the United States:

• Tuesday: NFIB Small Business Optimism Index
• Wednesday: Consumer Price Index (CPI)
• Friday: Retail Sales

Internationally:

• Tuesday: German and Indian CPI
• Thursday: Central Bank of Mexico policy announcement
• Friday: Chinese Retail Sales and Industrial Production

While the week ahead may not bring a flood of economic data, these scheduled releases could have significant implications for market dynamics and economic forecasts. Monitoring these developments will be essential for understanding the broader economic landscape.

US, Dollar, and Wall Street

While it is now confirmed that Donald Trump has won the presidential election, it is important to highlight that when he assumes office, Republicans will control both the Senate and the House of Representatives. This majority will grant the ruling government greater leverage to implement its policies. However, these shifts pertain to 2025 and beyond. What matters now and could influence market movements in the coming week is the Federal Reserve’s recent meeting and upcoming inflation data.

Last week, the Federal Open Market Committee (FOMC) held its seventh meeting of 2024 on Thursday, during which it reduced the target range for the federal funds rate by 25 basis points to 4.50%-4.75%. However, growing speculation about the economy’s resilience and a robust labor market is raising doubts about the likelihood of further rate cuts in December. Currently, the probability of maintaining the current rate in December stands at just over 11%, according to the CME Group’s FedWatch Tool.

Additionally, with the new administration expected to introduce more business-friendly policies, including potential tariff increases and lower income taxes, the Federal Reserve may adopt a more cautious approach. If next week’s inflation data indicates persistently high levels, the current 11% probability of holding rates could increase significantly, bolstering the U.S. dollar and putting pressure on stock markets.

Inflation has been on the rise across various economies in recent months, and similar trends are expected in the U.S. We anticipate that the Consumer Price Index (CPI) for October will show a 0.2% increase, pushing the annual rate up to 2.5% from 2.4% in the previous month. Core inflation, which excludes food and energy prices, is projected to rise by 0.3% in October, leading to a year-over-year increase of 3.3%. These figures underscore the potential challenges in further reducing rates.

On Friday, the October retail sales report will be released. Although October data might be premature for assessing holiday sales, which typically commence in November, election-related enthusiasm and early New Year purchases could still have an impact. Retail sales are expected to rise by 0.3% in October. Additionally, earnings reports from major retail companies such as Home Depot and Shopify are due this week, and these are expected to exceed estimates in this sector.

This week will also feature numerous speeches from FOMC members, which could provide additional clarity on the Federal Reserve’s future decisions. Overall, we anticipate positive data that, as previously mentioned, could increase the likelihood of maintaining the current rate at the December meeting.

Market Reactions

Stock markets may experience some corrections before their next significant move. The S&P 500, from a technical perspective, is showing signs of a potential pullback, with a doji candlestick pattern forming on the H4 chart and the RSI indicating overbought conditions. The main pivot for the US500 is at 5,870, with initial support at 5,925.

For similar reasons, a potential correction in the S&P 500 could lend support to the dollar index, helping it maintain gains above 103.50 in the week ahead.

China, a week after the NPC meeting! 

Last week, China’s National People’s Congress Standing Committee met to discuss fiscal stimulus, focusing recent support primarily on local banks. However, with anticipated new tariffs from the U.S., particularly under the Trump administration, China may need to reconsider its stimulus priorities. These potential tariffs could also open the door for broader stimulus measures across different sectors.

Longer-term risks, including Trump’s proposed 60% tariff on Chinese exports, could add considerable strain to China’s export-dependent economy. For now, we project growth around 4.5% this year, slowing to 4% next year as downside risks accumulate. Although China may increase stimulus efforts, concerns about public sector debt may restrict more aggressive fiscal interventions.

China’s economic outlook remains uncertain, and recent policy support is likely to have a limited impact. Next week’s retail sales and industrial production data will provide further insights, though we remain cautious about hitting the 5% growth target, even if results exceed expectations.

In the long term, the U.S. election outcome may encourage China to shift its stimulus focus toward boosting domestic consumption. In the short term, however, we remain optimistic about the upcoming economic data releases. With positive projections, we expect the Chinese Yuan to recover some of last week’s losses against the U.S. dollar.

From a technical perspective, USD/CNH trades at a critical level of 7.20 against the USD, with the first resistance at 7.26 and support at 7.15. A move above or below these levels could signal the next trend direction.

Gold’s Unique Role and Recent Market Movements

Gold is distinct among commodities, valued not for industrial applications but for its aesthetic appeal and role as a store of value. Many investors view gold as a hedge against declining fiat currencies—a sentiment highlighted by Alan Greenspan in 2011, who noted that demand for gold often mirrors distrust in paper money.

Following Trump’s 2024 election win, the dollar surged, briefly pressuring gold prices downward. However, as the Federal Reserve lowered rates, the dollar softened, allowing gold prices to recover slightly. The resolution of the election removed market uncertainty, leading to a rally in risk assets, while gold, which had neared $2,800 an ounce pre-election, adjusted with the dollar’s fluctuations.

Historically, gold prices tend to rise when real 10-year interest rates approach zero or decline and fall when rates increase. With positive expected economic data USD and Bond Yields can hold the gains, which put the gold under pressure, raising the risk of a sell-off in the short term. From a technical perspective, gold appears in a correction phase, if not yet a clear downtrend. If XAU/USD fails to break above $2,750, the bearish sentiment may dominate, with $2,640 as the next target before further trend development.

Oil and Global Market Optimism

Global markets are rallying, driven by optimism surrounding President Trump’s return and the potential for peace talks between Russia and Ukraine. The ongoing conflict has cost U.S. taxpayers $178 billion, and both Trump and Putin have expressed interest in discussing a resolution, offering hope for peace. If successful, this could negatively impact oil prices.

Additionally, Trump’s plans to reinstate a maximum-pressure campaign on Iran are garnering attention. His aim to increase sanctions on Iran and limit its oil exports contrasts with the Biden administration’s policies, which critics argue allowed Iran to fund militant groups, thereby intensifying tensions in the Middle East. This geopolitical tension could lead to higher energy prices.

While the stock market benefits from reduced fears of higher corporate taxes and unrealized gains taxes, oil prices remain pressured by concerns over weak demand from China, the world’s largest oil importer. October crude imports fell 9%, marking a six-month decline.

Meanwhile, natural gas prices are rising due to production disruptions caused by Hurricane Rafael, which continues to affect production in the Gulf of Mexico. Given the conflicting factors at play, the global economic outlook remains unclear.

For the short term, there is little data supporting a rise in WTI prices, and the expected strength of the USD could be a negative factor. However, geopolitical conditions, especially the higher risks in the Middle East, cannot be overlooked.

From a technical perspective, we anticipate a slow downtrend, with $69 and $67 serving as the first and second support levels.

Bitcoin’s Bullish Outlook Post-Trump Victory

Following Donald Trump’s victory, market analysts are forecasting a potential shift in cryptocurrency regulation, as promised during his campaign rallies. A key area of focus will be the U.S. Securities and Exchange Commission (SEC), which, under the Biden administration, increased scrutiny of the crypto market. There are hopes for clearer classifications of crypto assets and faster progress on stablecoin legislation. While some anticipate Trump’s policies may be more favorable to the industry, it remains uncertain exactly how his administration will approach crypto regulation. However, the involvement of Elon Musk in Trump’s management team could be a positive factor for the market.

Trump has also proposed the creation of a U.S. national Bitcoin reserve and has emphasized the need for the U.S. to become a global leader in cryptocurrency. His plans to replace SEC Chair Gary Gensler, who has been critical of crypto, are viewed as potential market-moving developments.

From a technical perspective, Bitcoin remains in a clear uptrend, with $73,000 serving as key support. After spending considerable time in the $70,000 range, it appears that as long as the key psychological level of $70,000 holds, the bulls maintain enough strength to counter any bearish pressures.