Things to watch out for on Thursday, December 1:
Market sentiment fluctuated between optimism and fear, with the US dollar starting the day on the wrong foot, rallying midway through, and finally slumping to close lower against its main rivals.
The last collapse of the dollar was due to the words of the President of the federal reserve from the United States, Jerome Powell. In his speech at the Brookings Institution on the economic outlook, inflation and employment, Powell sounded mostly dovish. He said it makes sense to moderate the pace of interest rate hikes, although he added that monetary policy would have to remain “tight” for some time. Furthermore, he said the time to slow the pace of rate hikes could come as soon as the next meeting in December.
Powell added that economic growth has slowed below the long-term trend, which should continue. Lastly, he said that he does not want to push too hard and that cutting rates is not something he intends to do any time soon.
Lisa D. Cook, a member of the Federal Reserve, preempted Powell but sided with him. She said the inflation data shows some early signs of improvement and the Fed will likely take smaller steps as it progresses.
The odds of a 50 basis point rate hike in December increased from 69.9% before the speech to over 75%.
Earlier in the day, optimism was supported by news from China and the easing of coronavirus-related restrictions in Zhengzhou and Guangzhou, despite government efforts to control new cases. China has continued to report record daily infections, but massive protests have forced the decision.
In the meantime, european inflation it fell for the first time in seventeen months, as the euro zone’s annual Harmonized Index of Consumer Prices stood at 10% in October. In addition, EU countries are looking into capping the price of oil at $60 a barrel, according to people familiar with the matter.
Finally, the US economy grew at an annualized rate of 2.9% in the third quarter, compared to a previously estimated rate of 2.6%.
EUR/USD is approaching the 1.0400 level, while GBP/USD is trading around 1.2040. The Australian dollar was the best performer as AUD/USD stands at 0.6780. USD/CAD pair drops to 1.3450, while USD/JPY trades at 138.10.
Spot gold is trading at fresh weekly highs around $1,765 a troy ounce, while crude oil prices are up slightly and WTI stands at $80.45 a barrel.
Core PCE inflation, the Federal Reserve’s favorite gauge, and the October manufacturing PMI will be released on Thursday.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
