Dollar extends rally, markets await UK inflation data and Fed speeches

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This is what you need to know to trade today Wednesday 17 November:

The US dollar continues to gain strength against its main rivals in the middle of the week, with the US Dollar DXY index rising above the 96.00 level for the first time in 16 months. Upbeat US retail sales data and rising US Treasury yields on inflation fears helped the dollar outperform its rivals. Investors await the release of October inflation data for the UK and the EU. US housing starts and building permits could generate new momentum in the second half of the day. Several FOMC policy makers will also deliver speeches during the American session.

The 10-year US Treasury yield rose to its highest level in three weeks at 1.65% earlier in the day and remains relatively quiet at the start of the European session. The major Wall Street indices posted modest gains the day before and US index futures are moving sideways today.

St. Louis Fed Chairman James Bullard called for the FOMC to become “more optimistic” in upcoming meetings, arguing that this would ease the process of normalizing monetary policy. On a pessimistic note, San Francisco Fed Chair Mary Daly said the Fed should remain patient when it comes to raising the policy rate to combat high inflation.

The EUR/USD It fell below 1.1300 for the first time since July 2020 during the Asian session on Wednesday. Meanwhile, Germany suspended approval of the Nord Stream 2 project and natural gas prices soared in Europe, weighing further on the common currency. Eurostat is expected to report that the CPI consumer price index rose 4.1% year-on-year in October.

The GBP/USD manages to stay above 1.3400 as investors await UK CPI inflation data, which could increase the likelihood that the Bank of England will increase its policy rate by 20 basis points in December.

See: UK CPI Preview: Buy the Rumor, Sell the Fact? Three scenarios for GBP / USD

The USD/JPY it posted impressive gains following rising US bond yields and the broad strength of the dollar on Tuesday. Currently, the pair is moving at its strongest level since March 2017 and approaching 115.00.

The oro It hit new multi-month highs near $ 1,880 on Tuesday, but lost its traction during the American session. Since the hot US CPI report, gold had been capitalizing on inflation fears, but the precious metal appears to be struggling to continue finding demand amid rising US bond yields. The XAU / USD is currently fluctuating within a tight range above $ 1,850.

Cryptocurrencies: The Bitcoin it lost more than 5% on Tuesday and is trading below the key $ 60,000 level on Wednesday. India is reportedly trying to ban cryptocurrency transactions and China is renewing efforts to restrict mining activities. The Etereum it closed for the fifth straight day in negative territory on Tuesday and lost more than 10% during the period. ETH / USD remains under pressure on Wednesday and is approaching $ 4,000.

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