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Forex Today – Asian Session: Fed keeps rates unchanged, Dollar falls and stocks rise

Markets will continue to digest the FOMC meeting. During the Asian session, Australia will release data on trade and mortgage lending. Later, Switzerland will report on consumer inflation. In the United States, weekly unemployment benefit claims will be published before the NFP on Friday.

Here’s what you need to know on Thursday, November 2:

The Federal Reserve (Fed) decided to keep the federal funds target range unchanged between 5.25% and 5.50%, in line with market expectations. The statement issued by the Fed was similar to the one published in September, and President Jerome Powell’s statements did not bring any surprises.

Wells FArgo Analysts on the FOMC:

For the third time in the last four monetary policy meetings, the FOMC decided today to maintain rates, although it continues to keep the door open to a new rise. It seems to us that the bar for further rate increases is increasingly higher.

The Dollar Index erased its gains following Fed Chairman Powell’s press conference. After trading above 107.00 and hitting weekly highs, the DXY closed below 106.70. The Dollar faced downward pressure due to increased risk appetite and increased demand for Treasury securities. In the stock market, the Dow Jones gained 0.67%, while the Nasdaq rose 1.64%.

Turning to Wednesday’s US data release, results were mixed. The ADP employment report showed a modest increase in private payrolls at 113,000, missing market expectations of 150,000 but beating September’s figure of 89,000. The JOLTS job opening data exceeded the market consensus, standing at 9.55 million. However, the ISM Manufacturing PMI unexpectedly fell to 46.7 in October, below the expected reading of 49. These figures had minimal impact on the markets.

In the United States, weekly unemployment benefit claims and unit labor costs for the third quarter will be published. On Friday, the focus will be on the release of nonfarm payrolls.

EUR/USD pared losses after the Fed. It traded below the critical support level of 1.0520 for a few minutes, and then rebounded to 1.0580, supported by weakness in the US Dollar.

GBP/USD remained sideways around 1.2145 after briefly trading below 1.2100. The pair continues to move sideways with a bearish bias. The Bank of England is expected to keep the key rate unchanged at 5.25%, with a vote potentially divided. Governor Andrew Bailey will hold a press conference following the decision.

Japanese authorities expressed concern about “unilateral moves”, but USD/JPY remained firm above 150.00, trading near multi-decade highs. It fell below 151.00 after the FOMC, affected by lower Treasury yields.

USD/CHF lost ground and traded below 0.9100, moving away from monthly highs. Switzerland will report its Consumer Price Index for October, with the headline figure expected to remain at 1.7% year-on-year.

AUD/USD had its best day in weeks, consolidating gains following the Fed decision and approaching the 0.6400 area. If it surpasses this level, it is likely to continue rising. Positive market sentiment is crucial for the pair. Australia will release its Trade data on Thursday.

USD/CAD reached new highs at 1.3898, but then retreated to 1.3860. The pair is facing strong resistance near 1.3900.

Gold experienced its third consecutive day of losses, however closed at $1,978 after bottoming at $1,969.90. Silver also trimmed losses during American hours and ended around $22.70.

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Source: Fx Street

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