What to watch for on Friday, November 11:
The US dollar tumbled against its main rivals on Thursday as market participants scrambled to price in a pivot in US Federal Reserve monetary policy as soon as next December. The Consumer Price Index for October unexpectedly fell more than expected, as annual inflation increased by 7.7%. The core reading, which excludes food and energy price volatility, came in at 6.3%, down from 6.6% in September.
Following the release, CME Group’s FedWatch tool showed markets pricing in an 80% chance of a 50 basis point rate hike in December, up from 52% before the release. It is time for the US Federal Reserve to change course.
Optimism returned. Equities soared, yields plummeted and risk appetite flows came back to life. US indices rose more than 3% each, with the Nasdaq Composite rising 6%. Elsewhere, Treasury yields fell by more than 20 basis points, with the 10-year Treasury yield currently trading at 3.83%.
EURUSD is trading near a monthly high of 1.0184, while GBPUSD extends its gains before the US close, now approaching 1.1700. AUDUSD is about to challenge the 0.6600 zone, while USD/CAD drops to 1.3350. Lastly, USDJPY is trading around 141.80, while USDCHF dips to 0.9660.
Gold hit new all-time highs in three months, now trading around $1,754 a troy ounce. Crude oil prices will kept at low levels recovering just some ground after the last fall. WTI is trading around $86.40 per barrel.
In a negative tone, the Chinese Communist Party’s Politburo Standing Committee (PSC) held a coronation-related meeting and urged maintain the zero covacha policy. Another negative sentiment factor is the collapse of cryptocurrency exchange FTX earlier this week, which is said to have a $6 billion black hole. The crisis is spreading like wildfire in the world of cryptocurrencies, and the end is yet to be seen. Investors, however, hardly paid attention to the headlines after the CPI release, which even supported the cryptocurrency market.
Source: Fx Street
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