This is what you need to know to trade today Thursday November 3:
Following Wednesday’s high volatility in the markets during the Fed event, the dollar appears to be stabilizing early on Thursday with the DXY dollar index moving sideways in a tight range above 112.00. US stock index futures are trading modestly higher on the day after suffering heavy losses on Wednesday and the 10-year US Treasury yield remains above 4%. The Bank of England (BoE) will announce its monetary policy decision and Governor Andrew Bailey will comment on the outlook at a news conference starting at 12:30 GMT. The US economic docket will include September goods trade balance data, weekly numbers for initial jobless claims and the services PMI of the ISM later in the day.
See: Bank of England Forecast: Why Super Thursday is going to sink the pound, even in the event of a big rally
As expected, The Fed decided to raise its interest rate by 75 basis points. to the 3.75-4% range after its November monetary policy meeting. In the monetary policy statement, the Fed noted that those responsible for monetary policy take into account cumulative tightening, delays in monetary policy and economic and financial developments in determining the pace of rate hikes. This comment caused a strong selling of the dollar, but the comments of the chairman of the FOMC, Jerome Powell, during the press conference, allowed the currency to recover its strength.
Powell reiterated that it was too early to think of a pause in interest rate hikes and said he expected the December dot plot to show a higher terminal rate than projected in September. The chairman explained that the slowdown in rate hikes could come as early as December or February, but reassured markets that will continue to tighten policy to prevent inflation from taking hold.
See: Fed Analysis: Powell Pivot? Not So Fast Reasons This Looks Like A Dollar Buying Opportunity
The EUR/USD reversed its direction after moving towards parity late in the American session on Wednesday and ended up posting its lowest daily close in two weeks. The pair is now trading in a tight channel around 0.9800.
The BoE is expected to raise its interest rate by 75 basis points, up to 3%. However, the decision of the British prime minister, Rishi Sunak, to postpone the announcement of the fiscal policy puts the bank in a difficult situation. Surely Bailey will be asked about the impact Sunak’s budget could have on politics going forward, and his comments could significantly affect how sterling performs against its rivals. The GBP/USD lost over 150 pips on Wednesday and is now trading in negative territory around 1.1350.
See: BOE Forecast: A very tight decision between 50 and 75 basis points, GBP/USD will suffer
The USD/JPY staged a bounce during Powell’s press conference late on Wednesday and ended up closing the day flat near 148.00. The pair is relatively quiet in early Thursday waiting for the next catalyst.
Pressured by the decisive rebound seen in US Treasury yields during Powell’s press conference, the Prayed posted heavy losses on Wednesday. XAU/USD remains under downward pressure and is trading at its lowest level since October 20, around $1,630.
The Bitcoin lost more than 1% on Wednesday, but managed to stay above $20,000. The ethereum it was just a step away from $1,500, but found support near that level.
Source: Fx Street
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