Trump’s Dollar Policy Shift Boosts USD/JPY

The dollar rose 0.5% against the yen on Monday, climbing above 150.50 yen per dollar, as President-elect Donald Trump signalled support for a stronger currency, marking a departure from past rhetoric. Wall Street struck record highs on a shortened Black Friday trading session, while the FTSE 100 notched up its first positive month in three. Upcoming US payrolls data and ISM surveys released this week are expected to heavily influence market sentiment.

Equities

The FTSE 100 remained flat at 8,287.3 points on Friday, with light trading volumes on the US Thanksgiving holiday. Despite a quiet session, the index recorded its first monthly gain in three months, driven by strong performances in the mining and consumer goods sectors. Anglo American rose 5.4% following a Jefferies upgrade to “buy,” lifting industrial metal miners. The aerospace and defence sector fell 0.9%, with BAE Systems and Qinetiq dropping 4.9% and 3.5%, respectively, after BofA Global Research downgraded both stocks.

London-listed Georgian banks TBC Bank and Bank of Georgia fell sharply by 5.9% and 6.2%, following news of the Georgian government suspending EU accession talks. Spire Healthcare rose 2.7% amid reports that India’s Narayana Health is in advanced talks to acquire a controlling stake in the company, while Direct Line added 4.6%, continuing gains after speculation of a potential Aviva takeover.

In the United States, the S&P 500 and Dow Jones Industrial Average hit record highs during a shortened Black Friday trading session, bolstered by gains in technology and retail stocks. The S&P 500 climbed 0.56% to 6,032.44, while the Dow rose 0.42% to 44,910.65. The Nasdaq outperformed, gaining 0.83% to 19,218.17. Nvidia led the tech rally with a 2% increase, while Tesla jumped 3.7%. Retail stocks also advanced as the holiday shopping season began. Shares of Target and Macy’s rose 1.7% and 1.8%, respectively, as Adobe Analytics projected record Black Friday online sales of $10.8 billion, up 9.9% year-on-year.

For the week, the S&P 500, Nasdaq, and Dow posted gains of 1.06%, 1.13%, and 1.39%, respectively, while the small-cap Russell 2000 rose 1.48%, hitting a record earlier in the week. Trading volumes were subdued, reflecting the holiday-shortened week.

Forex & Commodities

The US dollar held steady on Monday as markets focused on upcoming economic data and central bank decisions. The dollar index was flat at 105.790, following a 1.8% gain in November.

Against the yen, the dollar hovered at 149.60 after dropping 3.3% last week, the largest decline since July. This came amid expectations of a potential Bank of Japan rate hike, with markets pricing in a 56% chance of a quarter-point increase at the BOJ’s December meeting. The euro remained at $1.0555, recovering from its one-year low of $1.0425 as markets considered political risks in France and possible rate cuts by the European Central Bank.

Gold prices fell by 1.1% to $2,625.69 per ounce, ending a four-session rally. The stronger dollar and profit-taking weighed on bullion, which had already lost more than 3% in November, marking its weakest month since September 2023.

Oil prices edged higher early Monday, supported by robust Chinese manufacturing data and tensions in the Middle East. Brent crude rose 0.79% to $72.41 a barrel, while West Texas Intermediate climbed 0.85% to $68.58. China's factory activity expanded at its fastest pace in five months, offering optimism for energy demand.