The following are the things you need to know on Wednesday, November 22 2023:
Despite Monday’s sharp decline, the US Dollar Index managed to gain some small daily points on Tuesday. The USD continues to hold its ground against its rivals early Wednesday. The US economic docket will include Durable Goods Orders data for October along with Initial Job Claims data for the week of November. The preliminary Consumer Confidence Index data for November will be published by the European Commission later in the American session.
As a result of the Federal Reserve (Fed) policy meeting minutes published on October 31-November 1, policymakers were reminded to proceed cautiously and based on data. Participants indicated that further policy tightening would be appropriate if inflation targets were not reached. After the publication, the benchmark 10-year Treasury bond yield stabilized around 4.4%, and Wall Street’s main indexes closed down moderately.
According to Reuters, Chinese government advisers plan to recommend a 4.5% to 5% economic growth target for next year. A widening interest rate differential with the West will remain the central bank’s concern, so monetary stimulus is expected to play a minor role.
EUR/USD
According to European Central Bank (ECB) President Christine Lagarde, it is not time to declare victory against inflation. EUR/USD closed in negative territory on Tuesday but managed to hold above 1.0900.
GBP/USD
As of Tuesday, the GBP/USD pair registered gains for the third straight trading day, reaching its highest level since early September, above 1.2550. Early Wednesday, the pair consolidated its gains below that level. British Finance Minister Jeremy Hunt will state the Autumn Budget during European trading hours.
NZD/USD
As US Treasury yields rose and the dollar index strengthened today, the New Zealand dollar fell back from its recent peak against the US dollar.
From its three-month high of 0.6086 to around 0.6030, the NZD/USD pair fell today. US Treasury yields climbed due to this decline, reaching 4.41% for the 10-year bond and 4.88% for the 2-year bond. As a result, the greenback’s value was supported by the US Dollar Index (DXY), which measures the dollar’s strength against a basket of currencies.
A hawkish minutes released by the Federal Open Market Committee (FOMC) on Tuesday led to the downward move for the New Zealand dollar. According to the minutes, monetary tightening would continue should inflation remain above target levels. As a result of this stance, the US dollar is expected to continue to strengthen as higher interest rates usually attract investors looking for higher returns.
Further economic indicators may influence currency movements in the near future. Jobless claims and Michigan Consumer Sentiment figures are set to be released later today, which provide insight into the labor market and consumer attitudes, respectively. In addition, traders will be watching New Zealand’s Q3 Retail Sales data, which is expected this Friday, which may lend some support to the currency.
Investors and analysts will closely monitor the upcoming releases for indications of recovery or weakness in the economy that could impact central bank policies and currency valuations.
USD/JPY
According to Japan’s Cabinet Office, the overall outlook for the economy for November had been cut, owing primarily to weak demand for capital expenditures and consumer spending. Before staging a rebound, USD/JPY fell to its lowest level in over two months, reaching 147.00. The pair was trading at around 149.00 at the time of press.
Gold
On Tuesday, the gold rally continued, and XAU/USD climbed over $2,000 for the first time since early November. On Wednesday, the pair were still trading modestly higher at $2,005.
