Here’s what you need to know on Thursday, November 7:
He US dollar (USD) outperformed its main rivals on Wednesday, as markets reacted to Donald Trump’s victory in the US presidential election. Early on Thursday, the USD Index corrects lower and fluctuates below 105.00 as the Investors prepare for the monetary policy decisions of the Federal Reserve (Fed). Additionally, the Bank of England (BoE) will publish its Monetary Policy Report and announce the interest rate.
The USD Index posted its biggest daily gain of the year, rising more than 1.5% on the day on Wednesday. The yield on the benchmark 10-year US Treasury bond soared, gaining almost 4%. Additionally, Wall Street’s major indexes rallied after the opening bell, with the S&P 500 Index ending the day 2.5% higher. The Fed is widely expected to cut the policy rate by 25 basis points to the 4.5%-4.75% range. Fed Chair Jerome Powell will discuss the policy outlook and answer questions at a press conference starting at 19:30 GMT. Before the Fed’s decision, the US economic calendar will include weekly data on Initial Jobless Claims and Unit Labor Costs for the third quarter.
US Dollar PRICE This Week
The table below shows the percentage change of the US Dollar (USD) against major currencies this week. US dollar was the strongest currency against the Japanese yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.79% | -0.11% | 1.25% | -0.26% | -0.97% | -0.07% | 0.87% | |
| EUR | -0.79% | -0.93% | 0.02% | -1.44% | -1.44% | -1.25% | -0.32% | |
| GBP | 0.11% | 0.93% | 0.70% | -0.52% | -0.52% | -0.32% | 0.62% | |
| JPY | -1.25% | -0.02% | -0.70% | -1.50% | -1.65% | -1.10% | -0.07% | |
| CAD | 0.26% | 1.44% | 0.52% | 1.50% | -0.49% | 0.18% | 1.14% | |
| AUD | 0.97% | 1.44% | 0.52% | 1.65% | 0.49% | 0.20% | 1.15% | |
| NZD | 0.07% | 1.25% | 0.32% | 1.10% | -0.18% | -0.20% | 0.94% | |
| CHF | -0.87% | 0.32% | -0.62% | 0.07% | -1.14% | -1.15% | -0.94% |
The heat map shows percentage changes for major currencies. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you choose the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change shown in the box will represent USD (base)/JPY (quote).
GBP/USD It lost more than 1% on Wednesday and posted its lowest daily close since mid-August. The pair bounces in the European morning on Thursday and trades comfortably above 1.2900. The BoE is expected to reduce the bank rate by 25 basis points to 4.75%. BoE Governor Andrew Bailey will deliver the policy statement at 12:30 GMT.
EUR/USD fell almost 2% on Wednesday and hit its weakest level in more than four months below 1.0700. The pair remains firm early on Thursday and is trading near 1.0750. Eurostat will publish Retail Sales data for September.
During Asian trading hours, data from China showed that Exports increased by 12.7% year-on-year in October, while Imports decreased by 2.3% in the same period. As a result, China’s trade surplus widened to $95.27 billion from $81.71 billion in September. After losing 1% on Wednesday, AUD/USD gained traction early Thursday and erased much of its losses. At press time, the pair was up almost 0.8% on the day above 0.6600.
USD/JPY gained bullish momentum and rose to its highest level since late July above 154.40. The pair corrects lower on Thursday and is trading near 154.00.
Pressured by rising US yields and broad-based USD strength, the Gold suffered heavy losses on Wednesday, closing the day with a 3% loss. XAU/USD struggles for a rebound on Thursday and trades marginally lower on the day below $2,660.
The Fed FAQs
The monetary policy of the United States is directed by the Federal Reserve (Fed). The Fed has two mandates: achieving price stability and promoting full employment. Your main tool to achieve these objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the Federal Reserve’s 2% target, it raises interest rates, raising borrowing costs throughout the economy. This translates into a strengthening of the US Dollar (USD), as it makes the United States a more attractive place for international investors to place their money. When inflation falls below 2% or the unemployment rate is too high, the Federal Reserve can lower interest rates to encourage borrowing, which weighs on the greenback.
The Federal Reserve (Fed) holds eight meetings a year, in which the Federal Open Market Committee (FOMC) evaluates the economic situation and makes monetary policy decisions. The FOMC is made up of twelve Federal Reserve officials: the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the eleven presidents of the regional Reserve banks, who serve for one year on a rotating basis.
In extreme situations, the Federal Reserve can resort to a policy called Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit into a clogged financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis of 2008. It involves the Fed printing more dollars and using them to buy high-quality bonds from financial institutions. QE usually weakens the US dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the capital of the maturing bonds it has in its portfolio to buy new bonds. It is usually positive for the value of the US Dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
