News: USD 2022-11-23 15:22

Traders Await FOMC Minutes to Learn About Fed’s Outlook on Monetary Policy

On Tuesday, the Swiss franc was the best-performing currency among the 20 global currencies we track, while the Brazilian real showed the weakest results. The Mexican peso was the leader among emerging markets, while the U.S. dollar underperformed among majors.

In focus today
U.S. Dollar Index

The U.S. Dollar Index (DXY) fell by 0.64% as U.S. Treasury yields continued to invert, fueling fears of a possible recession.

Possible effects for traders

Treasury yields are inverted since the difference between the yield on ten-year government bonds and two-year bonds turned negative. Such a situation signals that an economic recession is likely, and further monetary tightening is risky. According to Reuters, the market expects the U.S. interest rate to peak at 5% by mid-2023, and it starts to price in rate cuts after that. DXY has been stable during the Asian session as traders await the release of the Federal Reserve’s (Fed) policy meeting minutes. The report could offer clues to the outlook for inflation and interest rates. Fed minutes are due at 7:00 p.m. GMT today. Investors should look for any signs of discussions around moderating the pace of rate hikes.

XAUUSD

The gold price increased by 0.14% but closed below the important 1,750 level.

Possible effects for traders

XAUUSD received some support from the weakening U.S. dollar, but it is unclear if a rebound from 1,730 can be sustained. ‘I think the metals will eventually move higher. But right now it is a direct correlation with interest rates,’ said Daniel Pavilonis, senior market strategist at RJO Futures. XAUUSD has been trading in a narrow range during the Asian session as investors await the release of the Fed meeting protocols. Many analysts expect the Fed to remain hawkish, which is potentially bearish for gold. Kansas City Fed President Esther George said that the Fed might need to raise rates to a higher level and hold them longer to moderate consumer demand and successfully bring down high inflation. According to Reuters, the market is pricing in a 79% chance of a 50-basis point hike in December.

EURUSD

EURUSD traded in the positive territory, closing above 1.0300.

Possible effects for traders

The pair gained 0.60% intraday as the eurozone Consumer Confidence Index (CPI) came out better than expected, and the U.S. dollar retreated. EURUSD continued to increase during the Asian session and will likely retest 1.03600. The upcoming German and the eurozone PMI data due at 9:00 am GMT today may send the pair towards 1.03400 in case of good results. Alternatively, a disappointing figure will likely pause the rally and reverse the pair towards 1.02800.

Other events
GBPUSD

The British pound rose by 0.5% yesterday due to the better-than-expected UK government borrowing numbers. The general weakness of the U.S. dollar also provided some support.

Possible effects for traders

The data published on Tuesday showed that Britain’s government borrowed less funds than expected in October. However, the budget deficit is likely to increase in the months ahead due to energy bill support measures and slowing economy. Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics, said that ‘the downturn in GDP will start to slow the growth rate of tax receipts, and put some upward pressure on benefits spending towards the very end of this fiscal year.’ According to Reuters, the UK economy is already in a recession and will shrink by 1.4% in 2023. Thus, the fundamental pressure on GBPUSD is rather bearish. Today, the UK will release its Manufacturing PMI data at 09:30 a.m. GMT. Higher-than-expected results may drive GBPUSD towards 1.19450, while the weaker numbers may push the pair towards 1.18000.
Recent events
2022-12-01 02:50
News 93
India: GDP growth stays strong in 3Q22

3Q22 GDP rose at a 6.3%YoY pace, slightly exceeding market expectations and keeping growth for the full year on track to...

2022-11-30 14:00
News 342
Australia sees unexpected drop in October inflation

Monthly inflation data not only provides a more timely look at Australia's inflation than the old quarterly series, it h...

2022-11-30 13:58
News 284
Eurozone inflation comes down in November, paving way for 50bp ECB hike

Inflation dropped more than expected from 10.6 to 10% in November, mainly on energy price developments. Core inflation r...

2022-11-30 13:49
News 344
Inflation reality check

USD: Holding pattern
Despite geopolitical challenges to the East, it has been a quiet start to the week for FX ma...

2022-11-29 21:02
News 240
Some relief in German inflation

German inflation came down somewhat in November, on the back of energy base effects. However, the ongoing pass-through o...

2022-11-29 21:00
News 311
Inflation and energy prices force six in ten Belgians to cut daily expenses

High inflation prompts six in ten Belgians to save on daily expenses
Belgians are looking for savings to cope wit...

2022-11-29 20:58
News 170
Japan: labour market remains tight while consumption begins to slow

Labour market conditions tightened further last month, but we don't see any signs of wage growth yet. Meanwhile, goods c...

2022-11-29 01:16
News 182
U.S. net short dollar positioning hits largest level since July 2021 -CFTC, Reuters data

Speculators raised net short U.S. dollar positioning in the latest week to its largest level since July 2021, according ...

2022-11-29 01:14
News 207
U.S. Treasury net shorts decrease in latest week - CFTC

NEW YORK, Nov 28 (Reuters) - Speculators' net bearish bets on U.S. Treasury note futures decreased in the latest week, a...

2022-11-29 01:11
News 269
Dollar rebounds on Fed expectations, Aussie drops

NEW YORK, Nov 28 (Reuters) - The dollar clawed back earlier losses on Monday as a hawkish Federal Reserve official laid ...

2022-11-25 15:20
News 184
China’s central bank cuts RRR to support economy

The People's Bank of China cut the required reserve ratio by 0.25 percentage points to support economic growth, as the e...

2022-11-25 04:15
News 228
Australia shares likely to rise; NZ falls

Australian shares are likely to rise for the fourth straight day on Friday, as investors remain upbeat on the U.S. Feder...

2022-11-25 03:57
News 181
New Zealand consumer confidence slips in November - ANZ-Roy Morgan

Consumer confidence in New Zealand fell in November compared with the prior month amid soaring inflation, rising rates a...