During the Asian session, the Australian Westpac Leading Index is due, and RBA Governor Bullock is scheduled to speak again. Later in the day, the focus turns to US data ahead of the Thanksgiving holiday, which includes Jobless Claims, Durable Goods Orders, and the University of Michigan Consumer Sentiment survey.
Here is what you need to know on Wednesday, November 22:
The US Dollar rose on Tuesday in a move seen as corrective, as the Greenback remains vulnerable until market focus shifts back to the growth story instead of the Federal Reserve (Fed) not raising rates further.
The FOMC minutes showed that members would consider appropriate to tighten monetary policy further if ‘incoming information indicated that progress toward the Committee’s inflation objective was insufficient’. Also, participants’ judged that it would be appropriate for policy to remain at a restrictive stance for some time until inflation is clearly moving down sustainably toward the Committee’s objective.’
The US Dollar Index (DXY) bottomed at 103.17, the lowest level since August, and then turned to the upside, rising above 103.50. The correction took place as US yields remained steady.
Data from the US due on Wednesday includes the weekly Jobless Claims, Durable Goods Orders, and the University of Michigan Consumer Sentiment survey. On Thursday, US markets will remain closed due to Thanksgiving.
EUR/USD finished lower after being rejected from above 1.0950. The Euro lagged amid a decline in EUR/GBP that tumbled towards 0.8700. Eurostat will release Consumer Confidence data with November preliminary estimates.
The Pound was among the best performers, boosted by hawkish comments from Monetary Policy Members of the Bank of England. GBP/USD posted the highest daily close since early September, above 1.2500. UK Chancellor Jeremy Hunt will deliver the Autumn Forecast Statement, focusing on decisions regarding tax and public spending.
USD/JPY bottomed at 147.08 and rebounded, rising to 148.30. The pair offers stabilization signs.
Inflation data from Canada showed the Consumer Price Index (CPI) rose 3.1% compared to a year ago, below the 3.2% market consensus and under the 3.8% recorded in October. The figures indicate inflation continues to slow and had a limited market impact.
Analysts at TD Securities on Canadian inflation:
The BoC’s preferred measures of core CPI slowed to 3.55% from 3.80% y/y for a new cycle low, but progress was even more notable on a 3m annualized basis, with a decline to 2.96% from 3.7%. This represents a break below their recent range that will add to the Bank’s conviction that policy is tight enough to bring inflation all the way back to target. That could help set up a change in tone from the BoC early next year, but the Bank will still need to see more evidence of easing inflation pressures.
USD/CAD remains stagnant around 1.3700, showing indecision. Bank of Canada’s Governor Tiff Macklem will speak on Wednesday.
The Australian Dollar lagged despite the modestly hawkish Reserve Bank of Australia meeting minutes and Governor Bullock’s comments. AUD/USD reached the 200-day Simple Moving Average and turned downwards, falling to the 0.6550 area. The trend remains upward. On Wednesday, Bullock will speak again; however, no surprises are expected.
Gold rose sharply despite steady yields and peaked at $2,007. It then pulled back toward the $2,000 area. The critical level to break is $2,010.
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