US Dollar, Euro, British Pound, Gold, Crude Oil, Stocks

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The US Dollar broadly outperformed against its major counterparts in the third quarter of 2023. Relatively speaking, it performed the best against the British Pound, Japanese Yen and Australian Dollar. Meanwhile, the Chinese Yuan fared better.

A key theme throughout the third quarter was the evolving landscape of long-term Federal Reserve monetary policy expectations. At most, the central bank may hike rates one more time this year. But, that is not where the focus has been.

Instead, financial markets have been increasingly pricing in a higher terminal rate. In other words, the tone set by Chair Jerome Powell and company has been alluding to a scenario where interest rates stay higher for longer.

That is why we have seen a more aggressive rise in the 10-year Treasury yields as opposed to the 2-year rate. In response, the US Dollar pushed higher. This also pressured lower gold prices. Crude oil prices continued climbing, perhaps a reflection of more robust growth expectations.

Sentiment started to give way towards the end of Q3. The Dow Jones, S&P 500 and Nasdaq Composite all finished in the red. But, pronounced gains during the first 2 quarters mean equities are still on track to finish in the green this year. Could this change in Q4?

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How Markets Performed – Q3 2023


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— Article Body Written by Daniel Dubrovsky, Contributing Senior Strategist for

— Individual Articles Composed by DailyFX Team Members

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