Business Market Report

Dollar’s rally continues and is far from over

What you need to know on Thursday, November 25:

Demand for the greenback persisted after a batch of US data hinted at stubbornly high inflationary pressures and soon-to-come Federal Reserve action to counter its effects on the economy.

On Wednesday, market participants knew that US inflation soared to its highest in 30-years in October, according to the Core Personal Consumption Expenditures Price Index report. Also, the FOMC published the Minutes of its November meeting. The document showed that policymakers believe they should be prepared to adjust the pace of the asset purchases tapering and raise the target range for the federal funds rate sooner than currently anticipated should inflation continue to run hot. Still, the market’s reaction was quite limited as there were no surprises in the statement.

The EUR/USD pair trades below the 1.1200 figure, hit by local data and ECB’s inaction. Germany published the November IFO survey, which showed that the Business Climate contracted to 96.5, falling for a fifth consecutive month, while Germany published the November IFO survey, which showed that the Business Climate contracted to 96.5, falling for a fifth consecutive month noted that the central bank   must not tighten monetary policy too early in response to an inflation spike driven by “purely temporary factors.”

Another factor hitting the EUR and the market’s mood, in general, is the resurgent spread of coronavirus in Europe. Several countries are taking fresh restrictive measures and studying making vaccines mandatory.  

GBP/USD came under renewed bearish pressure and dropped to the current 1.3320 region.  Bank of England Monetary Policy Committee member Silvana Tenreyro said on Wednesday that she would not want to say specifically if the BOE would make its first rate hike in either December or February. Instead, she prefers a “modest” tightening of the monetary policy.

The USD/JPY pair reached a fresh 2021 high of 115.51, holding nearby at the end of the day. Commodity-linked currencies shed ground unevenly, with AUD/USD now trading below 0.7200 and USD/CAD at around 1.2670.

Global stocks traded in a dull fashion, with European and American indexes mixed around their opening levels.

US Treasury yields are ending the day with modest losses. Nevertheless, the yield on the 10-year note peaked at 1.693%, retreating from the critical 1.70% threshold.

Gold is modestly lower on a daily basis, now trading around $1,785 a troy ounce. Crude oil prices eased modestly, with WTI currently at $78.25 a barrel.

Bitcoin could dodge a steep correction if BTC holds above this price level


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2021-11-24 19:57:16

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