What to watch for on Thursday, November 3:
The dollar ended Wednesday higher across the currency board after a volatile American session. The US Federal Reserve was behind the wild moves as the central bank delivered on expectations, but President Jerome Powell surprised with a speech aggressive line.
The central bank pulled the trigger at 75 basis points, and the accompanying statement suggested that policymakers would soon slow the pace of QT: “In determining the pace of future increases in the target range, the Committee will take into account account the accumulated tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments” The dollar plummeted to new weekly lows against most of its rivals, as that investors rushed to price in a 50 basis point rate hike in December.
However, President Jerome Powell’s speech brought dollar buyers back to life. The central bank chief said inflation needs to be lowered “decisively”, adding that they are prepared to change monetary policy as needed. He mentioned that at some point it will be necessary to slow down the pace of rate hikes, but also that inflation may take time to come down, so the restrictive policy should be maintained for some time. Finally, he added that the level final rates would be higher than expected. His words revived the odds for a fifth 75 basis point hike in December. Stocks fell, yields soared, and the dollar soared.
Meanwhile, speculation that China might ease its zero-gap policy was erased after the country announced a new lockdown, this one in particular, affecting the area surrounding the world’s largest iPhone factory, sparking worry at the beginning of the day.
The EUR/USD pair is trading in the 0.9820 area after recording a new weekly high at 0.9975. GBP/USD has tumbled below 1.1400, while AUD/USD is trading around 0.6350. The USD/CAD pair is currently advancing above 1.3700.
The dollar also gained ground against its safe-haven rivals. USD/CHF is above parity while USD/JPY is trading around 147.80.
Gold advanced earlier in the day but ended it around $1,636 a troy ounce.
According to preliminary data from the EIA, the US imports of Saudi crude oil increased by 208k bpd to 533k bpd in the week ending October 28, according to preliminary EIA data, unexpectedly boosting oil prices. WTI fell late in the day amid falling stocks but still closed in the green at $89.20 a barrel.
TheBank of Englandnext super thursday.
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Source: Fx Street
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