Today’s Forex: US Dollar had a dismal start to December, Powell is under observation, and the ISM PMI

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US Dollar had a dismal start to December,

Despite the overnight gain on Wall Street, Asian equities mainly closed down on Friday, indicating a cautious US dollar attitude toward risk. Though factory activity in other important Asian regions remained slow due to poor global demand, China’s Caixin Manufacturing PMI surprisingly increased to 50.7 in November, failing to impress investors.

As investors assess their expectations for a US Federal Reserve (Fed) interest rate drop, the US S&P 500 futures remain quiet. The US Core Personal Consumption Expenditures (PCE) Price Index, which was released on Thursday, increased at an annual rate of 3.0% in October after rising at a 3.4% rate for three months. Monthly Core PCE inflation was flat in the reporting month, missing the 0.1% gain predicted and down from the 0.4% print recorded in September.

“We are at, or near, the top level of the target range of the federal funds rate,” said John Williams, President of the New York Fed Bank, on Thursday. Williams reached this conclusion after weighing the dangers of excessively high inflation and a weaker economy.

Both the US economy’s declining inflation and the Fed’s officials’ dovish remarks contributed to the strengthening of dovish expectations. As a result of end-of-month short covering, the US dollar and US Treasury bond rates have once more fallen into negative territory.

                              US Dollar Status

USDEURGBPCADAUDJPYNZDCHF
USD-0.12%-0.05%-0.08%0.03%0.11%0.03%-0.05%
EUR0.12%0.05%0.03%0.14%0.21%0.14%0.07%
GBP0.05%-0.06%-0.03%0.09%0.16%0.08%0.01%
CAD0.09%-0.02%0.04%0.12%0.19%0.11%0.05%
AUD-0.03%-0.15%-0.09%-0.11%0.07%0.00%-0.08%
JPY-0.11%-0.19%-0.17%-0.20%-0.05%-0.06%-0.14%
NZD-0.03%-0.14%-0.08%-0.11%0.00%0.08%-0.08%
CHF0.04%-0.07%-0.01%-0.04%0.08%0.15%0.07%

 

According to the Fed Watch tool from the CME Group, markets are still pricing in a 48% possibility of a rate drop in March of next year, up from a 22% chance last week.

The benchmark 10-year US Treasury bond rates are licking their wounds around 4.33%, but as of this writing, the US Dollar Index is holding the lower ground near 103.30, consolidating the weekly losses.

Current US Dollar Price.

The US dollar (USD) and the major currencies mentioned today are shown as a percentage change in the table below. With respect to the euro, the US dollar was the weakest.

The main currencies’ percentage movements relative to one another are shown on the heat map. The quotation currency is selected from the top row, and the base currency is selected from the left column. In the event that you choose the Euro option in the left column and go horizontally to the Japanese Yen, the EUR (base)/JPY (quote) percentage change will be shown in the box.

Jerome Powell, the Federal Reserve Chair, will now be the center of attention for later American trade. At two different events hosted by Spelman College in Georgia, Powell is scheduled to talk at 16 GMT and 19 GMT. His remarks will be thoroughly examined in order to uncover any new clues about the bank’s future interest rate strategy. Before the policy meeting on December 12–13, this will be Powell’s last public appearance. Beginning on Saturday, the Fed will go into “blackout mode.”

In addition, new US dollar values will be available throughout the US session with the publication of the US ISM Manufacturing PMI data.

A renewed decline in the US dollar supports most major currencies. In anticipation of the European opening bells, the Euro (EUR) seems to be the strongest currency. After hitting new six-day lows around 1.0879 on Wednesday due to expectations of the European Central Bank’s (ECB) interest rate drop intensifying due to weaker Euro area inflation data, the EUR/USD pair is maintaining its recovery momentum above 1.0900. Ahead of ECB President Christine Lagarde’s address later in the day, traders will be watching the final Eurozone Manufacturing PMI.

Due to hawkish remarks from the BoE, the GBP/USD pair is now rising around 1.2650. On Thursday, Megan Greene, the hawkish dissenter from the BoE, said that “the policy may have to remain restrictive for a protracted length of time in order to restore inflation to 2% over the medium run.” Although the UK S&P Global final manufacturing PMI data is anticipated, the pound sterling is not expected to be affected in any way.

A cautious tone in the market and solid Chinese Caixin PME statistics do not inspire antipodeans in the slightest. The US dollar is also lower overall.  Though NZD/USD is flattish at 0.6150, AUD/USD is testing the 0.6600 barrier, reversing an early rise to 0.6630.

Now that the USD/JPY exchange rate is back over 148.00, the Japanese yen is somewhat undoing its weeklong gain against the US dollar. While it awaits the release of the best Canadian job statistics, USD/CAD is nursing its wounds around 1.3550.

In the wake of the disappointing OPEC+ decision, WTI is starting to rebound, approaching $76.  Voting to reduce production voluntarily for the first quarter of 2024, Saudi Arabia, Russia, and other OPEC (+) members agreed. Angola, however, disapproved of the revised production quota that the alliance gave it.

Gold Price As a result of dovish Fed predictions, the price of gold is returning to $2,050.

Published by : Reshraman

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