What you need to take care of on Wednesday, November 23:
The greenback edged lower on Tuesday amid the better performance of global equities and weaker US Treasury yields. Activity, however, was limited ahead of the FOMC Meeting Minutes and US Durable Goods Orders to be out on Wednesday.
Asian and European indexes closed in the green, while Wall Street posted substantial gains, adding the most in the final hours of trading. On the other hand, US Treasury yields edged lower with the 10-year note yield down 7 bps to hover around 3.75%, and the 2-year offering 4.51% barely down for the day.
Different European Central Bank officials were on the wires, most of them paving the way for another 75 bps rate hike at the December meeting, but the EUR showed little reaction to the news. Robert Holzmann, head of the National Bank of Australia, to back a third consecutive aggressive rate hike. The move would raise the deposit rate to 2.25%. Also, Finnish ECB policymaker Olli Rehn said the ECB would continue to raise interest rates, and the pace of its hikes will be determined by the rate of inflation and the overall economic situation.
Federal Reserve representatives also had some things to say. Cleveland Federal Reserve President Loretta Mester noted that expectations for longer-term inflation are reasonably anchored, although wage growth lags below inflation in most sectors. Finally, she added that labor demand outpaces worker supply.
At the end of the day, the market focus was on the European energy crisis, as the G7 and the EU are once again discussing a cap on Russian oil prices.
EUR/USD recovered some ground but could not regain the 1.0300 threshold, holding nearby at the end of the US session.
Earlier in the day, market talks made the rounds about United Kingdom Finance Minister Jeremy Hunt pushing privately for Britain to have closer ties with the European Union, somehow generating tensions in the new UK Prime Minister Rishi Sunak’s government. GBP/USD settled at around 1.1880 amid the broad dollar’s weakness.
USD/CAD is down 1.3385 after a batch of mixed Canadian data. Retail Sales declined by less than anticipated, while the October New Housing Price Index declined in October. Also, Bank of Canada Senior Deputy Governor Rogers hit the wires and said that higher interest rates are starting to slow the economy and contain inflation. The AUD/USD trades around 0.6640, marginally higher on the day, while USD/JPY hovers around 141.20.
Gold trimmed early gains and finished the day little changed at around $1,738 a troy ounce. Crude oil prices ticked higher, with WTI trading at $81.10 a barrel.
During Asian trading hours, investors will be looking at the Reserve Bank of New Zealand monetary policy decision.
The focus now shifts to the FOMC Meeting Minutes. The US Federal Reserve hiked rates by 75 bps for a fifth consecutive meeting earlier in the month, and market players were hoping for a hint on pivoting. The document released alongside the meeting could be understood as a potential easing in the pace of quantitative tightening, although chief Jerome Powell’s words surprised with a hawkish tone. The FOMC Meeting Minutes may shed some light on whatever the Fed may do in December, and market players will likely rush to price it in.
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