Forex Today – Asian Session: US Fed Ready to Pivot, Dollar Plunges

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Things to watch out for on Thursday, November 24:

The dollar came under selling pressure on Wednesday and ended the day sharply lower against all of its major rivals. The US dollar was affected by the bad data related to growth and by the Minutes moderate at the US FOMC meeting.

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The paper showed that most participants agreed that, while risk to the inflation outlook remained on the upside, a slower pace of interest rate hikes would be appropriate soon. Furthermore, they believe that monetary politics is getting close to a “sufficiently restrictive” level. The dollar continued to fall in immediate reaction to the news, while US indices resumed a bullish pace. The odds of a 50 basis point hike increased to 79% after the release and, according to Fedwatch, the terminal rate now stands at 5.03%.

S&P Global published the preliminary estimates of its PMIs for November. The EU figures were better than expected, but remained at contractionary levels. US indices, however, were very disappointing, prompting the first burst of dollar selling. The EUR/USD pair is trading near 1.0400 before the close.

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GBP/USD is hovering around 1.2050, holding most of its intraday gains. UK headline PMIs were better than expected, but point to continued economic contraction in the country. The market is paying little attention to Brexit-related headlines, but it seems that the issue is reappearing. Finally, the UK Supreme Court ruled against Scotland’s proposal to hold a new independence referendum.

Commodity-linked currencies benefited from the upbeat tone in global equities. Asian and European indices closed in the green, while US indices gained upward momentum following the FOMC Meeting Minutes. AUD/USD traded around 0.6730, while USD/CAD fell towards the 1.3360 price zone.

Safe haven currencies were the best performers against the US dollar. USD/CHF is down to 0.9420, while USD/JPY is trading around 139.45. In cash, gold was subdued for most of the day, with the US breaking above the $1,750 mark late in the afternoon, preserving its intraday gains.

Crude oil prices, on the other hand, fell, with WTI trading around $77.80 a barrel. Black gold fell despite the fact that the US Energy Information Administration reported that oil inventories fell by 3.7 million barrels during the week ending November 18. Speculations about the upcoming slack in demand, particularly due to the COVID situation in China, weighed on oil prices.

Thanksgiving Day is celebrated in the United States on Thursday, so activity in financial markets will be limited ahead of the weekend.

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Source: Fx Street

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