Dollar rallies on hawkish Fed minutes

“Our job is to find a few intelligent things to do, not to keep up with every damn thing in the world.” - Charlie Munger

 

 

HEADLINES

 

 

• More Fed officials open to faster bond-buying taper, quicker rates liftoff
• Dollar jumps on hawkish Fed, strong consumer spending data
• New Zealand dollar falls after central bank announces rate hike
• Gold at 3-week low on strong U.S. data, rate-hike bets
• Oil Drifts After Modest US Crude Build, Larger Reserve Release Plan
• Wall Street pares losses on positive economic data, tech recovery
• US 10-year yields to climb above 2% into 2022 – Credit Suisse

 

 

FOREX

 

 

More Fed officials open to faster bond-buying taper, quicker rates liftoff

 

A growing number of Federal Reserve policymakers indicated they would be open to speeding up the elimination of their bond-buying program if high inflation held and move more quickly to raise interest rates, minutes of the U.S. central bank's last policy meeting showed.

The readout released on Wednesday was the latest indication that anxiety about rising inflation at the Fed has now taken root, with many officials at the Nov. 2-3 meeting also suggesting elevated price pressures could prove more persistent.

 

Dollar jumps on hawkish Fed, strong consumer spending data

 

The dollar hit fresh 16-month highs against the euro on Wednesday as investors priced for the prospect that the Federal Reserve will begin hiking rates in mid-2022 while the European Central Bank is expected to remain more dovish as growth in the region lags.

 

New Zealand dollar falls after central bank announces rate hike

 

In other central bank developments, the Reserve Bank of New Zealand on Wednesday announced its decision to raise the official cash rate to 0.75%, in line with expectations of most economists in a Reuters poll. Following the RBNZ’s announcement, the New Zealand dollar tumbled nearly to $0.6916, against levels around $0.7 seen earlier in the week.

 

COMMODITIES

 

Gold at 3-week low on strong U.S. data, rate-hike bets

 

Gold prices slipped to a three-week low on Wednesday as robust U.S. economic data lifted the dollar and Treasury yields, with jitters around a sooner-than-expected interest rate hike from the Federal Reserve adding to the downbeat mood.

 

Oil Drifts After Modest US Crude Build, Larger Reserve Release Plan

 

Oil markets drifted Wednesday as traders took stock of a modest weekly build in U.S. crude stockpiles, reported a day after the United States and several other countries announced a coordinated release of their crude reserves in a bid to cool runaway fuel prices 

The 50-million barrel crude release from the U.S. Strategic Petroleum Reserve, which will hit physical markets in December, barely registered on the psyche of traders when the Biden administration announced it 24 hours ago.

 

 

STOCKS

 

 

Wall Street pares losses on positive economic data, tech recovery

 

The S&P 500 and the Nasdaq rose on Wednesday as positive labor and consumer data boosted economically sensitive sectors, while major technology shares bounced back from two days of steep losses.

Most heavyweight technology stocks pared early losses and traded higher by midday, with the S&P tech sector (.SPLRCT) up 0.2%. Rising Treasury yields had seen the sector dive around 3% this week.

 

 

ANALYSIS

 

 

US 10-year yields to climb above 2% into 2022 – Credit Suisse

 

“We believe a breakout above major support at 1.685/705% may be imminent, which would confirm a three-year basing structure, which would very likely take us above the year-to-date highs and retracement support between 1.775% and 1.82%.”

“Going into 2022, we maintain our long-held view that a move to 1.965/2.00% is likely in the first quarter, followed by retracement support at 2.16/18%.”

 

 

CHART

 

 

Euro / US dollar – 4-Hour Candlesticks

Source: GKFX Prime Metatrader 4

EUR/USD has continued its decline below 1.12, which was major resistance then support in 2019 and 2020 respectively. The Weekly RSI has also gone oversold below the 30 level. - Prepared by Trading Writers*

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar

 

SOURCE

 

 

https://www.fxstreet.com/economic-calendar
https://www.fxstreet.com/news/us-10-year-yields-to-climb-above-2-into-2022-credit-suisse-202111241546
https://www.reuters.com/markets/europe/futures-dip-ahead-data-barrage-nordstrom-sinks-after-earnings-2021-11-24/
https://www.reuters.com/markets/us/with-feds-powell-renominated-focus-turns-speed-bond-buying-taper-2021-11-24/
https://www.investing.com/news/commodities-news/us-oil-stockpiles-grew-by-1017-million-barrels-last-week-eia-2689465
https://www.cnbc.com/2021/11/24/asia-markets-us-treasury-yields-federal-reserve-currencies-oil.html