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.


#USD #FED #FOMC

Recent events
2023-02-02 17:53
News 593
ECB hikes rates by 50bp

The European Central Bank has hiked interest rates by 50bp and made a quasi-announcement of a further 50bp hike in March...

2023-02-01 19:52
News 44636
German labour market starts the year off strongly

Only a small increase in unemployment in January shows that the labour market remains an important source of resilience ...

2023-01-31 16:36
News 506
Eurozone avoids contraction but domestic demand falters

A resilient eurozone economy managed to grow by 0.1% in the fourth quarter, but this likely masks a contraction in house...

2023-01-31 12:58
News 258
China: PMI positively surprises the market

USDCNY fell to around 6.75 after the PMI data release came in better than expected
Surprise from the non-manufact...

2023-01-30 17:58
News 572
German economy falls into winter recession

So much for reliable statistics! The German economy contracted in the fourth quarter of 2022 after the first tentative s...

2023-01-28 17:21
News 885
Pressure on BOJ Grows

Market movers today
In the US, household spending probably declined in December, with high-frequency indicators s...

2023-01-28 17:19
News 389
Australian dollar shrugs as PPI falls

The Australian dollar is almost unchanged on Friday, trading at 0.7112.

Australia’s PPI slips

2023-01-28 17:13
News 21611
Exclusive: Top U.S. Treasury official to warn UAE, Turkey over sanctions evasion

The U.S. Treasury Department's top sanctions official on a trip to Turkey and the Middle East next week will warn countr...

2023-01-28 17:07
News 876
Dollar clings to gains after U.S. data; traders eye Fed next week

The dollar clung to modest gains against the euro on Friday after data showed falling U.S. consumer spending and cooling...

2023-01-28 17:01
News 661
Gold en route to sixth weekly gain; focus shifts to Fed

Gold steadied on Friday with gains capped by a stronger dollar, but the metal was still set for a sixth straight weekly ...

2023-01-28 16:50
News 22231
Oil prices settle lower on stronger supply outlook

Oil prices settled lower on Friday, making their weekly finish flat to lower, as indications of strong Russian oil suppl...

2023-01-28 16:46
News 546
Chinese PMIs And Potential Commodity Currency Recovery

With lingering questions on how much of an impact China’s reopening will have on the global economy, there’s likely ...

2023-01-28 16:32
News 690
Will the Fed add a hawkish flavor to a smaller hike?

With some Fed officials corroborating investors’ view of a quarter point increase, Wednesday’s FOMC gathering will l...