Forex

US Federal Reserve ready to pivot, US Dollar sunk


What you need to take care of on Thursday, November 24:

The Greenback came under selling pressure on Wednesday and finished the day sharply down against all of its major rivals. The American Dollar got hit by poor growth-related data and dovish US FOMC Meeting Minutes.

The document showed that most participants agreed that, despite the risk to the inflation outlook remaining skewed to the upside, a slower pace of interest rate hikes would be appropriate soon. Furthermore, they believe the monetary policy is approaching a “sufficiently restrictive” level. The US Dollar fell further as an immediate reaction to the news, while US indexes picked up an upward pace. Chances of a 50 bps hike rose to 79% following the release and according to Fedwatch, while the terminal rate is now seen at 5.03%.

S&P Global published the preliminary estimates of its November PMIs. The EU figures were better than anticipated but remained within contraction levels. US indexes, however, disappointed big, triggering the first bout of dollar selling. EUR/USD trades near the 1.0400 figure ahead of the close.

The GBP/USD pair hovers around 1.2050, holding on to most of its intraday gains. UK S&P Global PMIs were better than anticipated but signal persistent economic contraction in the country. Market is paying little attention to Brexit-related headlines, but it seems the issue is making yet another comeback. Finally, the UK Supreme Court rules against Scotland’s bid to hold a new independence referendum.

Commodity-linked currencies benefited from the upbeat tone of global stocks. Asian and European indexes closed in the green, while US indexes gained upward momentum after FOMC Meeting Minutes. AUD/USD trades around 0.6730 while USD/CAD declined towards the 1.3360 price zone.

Safe-haven currencies were among the best performers against the US Dollar. USD/CHF is down to 0.9420, while USD/JPY trades around 139.45. Spot gold remained subdued for most of the day, jumping above the $1,750 mark late in the US afternoon, retaining its intraday gains.

Crude oil prices, on the other hand, edged lower, with WTI trading at around $77.80 a barrel. The black gold fell despite the US Energy Information Administration reporting inventories of oil were down by 3.7 million barrels over the week ended November 18.  Speculations of upcoming sluggish demand, particularly due to the COVID situation in China, weighed on oil prices.

The US celebrates Thanksgiving on Thursday, which means action across financial markets will be limited heading into the weekend.

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