The dollar strengthened against its major counterparts and jumped above its sixth month high. The currency continued gaining after the U.S. Federal Reserve signaled a continuation of its restrictive policy, even as it held rates steady. This comes as the Swiss franc fell following the Swiss National Bank’s decision to maintain unchanged rates, marking the first time it has not increased rates since March 2022.
Central bank kept the interest rate unchanged in the range of 5.25%- 5.50%, as widely expected and warned that U.S. interest rates will remain higher for longer. The Fed’s decision to hold rates steady followed recent evidence that its 11 rate-hikes delivered so far are starting to turn the tide in the battle against inflation.
The Bank of England’s (BoE) decided to hold rates unchanged at 5.25% due to the deceleration of inflation, a loosening labor market, and a deterioration in business sentiment. The BoE added that rates would remain high for an extended period and “Further tightening would be needed if evidence of more persistent inflationary pressures. Pound slipped significantly after the policy.
Further, Powell said that the Fed will cut rates by a smaller-than-expected margin in 2024, amid a recent rise in U.S. inflation. The comments blindsided markets hoping for more monetary easing next year, triggering strong flows into the dollar and out of Treasuries. This saw the 10-year benchmark race to a 15-year high, while 2-year yields jumped to their highest levels since early-2001.
Crude oil prices recovered from the day’s low after a Russian ban on fuel exports snapped focus away from Western economic headwinds that had dropped prices $1 a barrel early in the session. Bullions and base metals extended their fall following the strong dollar.
The dollar index which measures the currency against six major counterparts, was down 0.15% at 105.2840. the currency retreated from its sixth month high.
MCX Gold future settled at 58822 down 0.98%. Silver at 73068 down 0.22%. Copper prices settled at 719.20 down 1.11%. Crude oil settled at 7483 up 0.11%. Natural gas settled at 218.80 down 3.66%.
Economic data and events scheduled today
Japan
At 5.00am – National Core CPI y/y. Data is foreseen at 3.0% from previous 3.1%.
At 6.00am – Flash Manufacturing PMI. Data is foreseen at 49.9 from previous 49.6.
Tentative – Monetary Policy Statement. BOJ Policy Rate. Forecast is to be kept unchanged at -0.10%.
Tentative – BOJ Press Conference
All above data could have a volatile impact on the Yen.
U.K.
At 11.30am-Retail Sales m/m. Data is foreseen at 0.5% from previous -1.2%.
At 2.00pm –
Flash Manufacturing PMI. Data is foreseen at 43.30 from the previous 43.00.
Flash Services PMI. Data is foreseen at 49.3 from previous 49.5.
At 3.30pm – CBI Industrial Order Expectations. Data is foreseen at -16 from previous -15.00.
All above data could have a volatile impact on the GBP.
Eurozone
At 12.45pm –
French Flash Manufacturing PMI. Data is foreseen at 46.2 from the previous 46.00.
French Flash Services PMI. Data is foreseen at 46.00 from the previous 46.00.
At 1.00pm –
German Flash Manufacturing PMI. Data is foreseen at 39.5 from previous 39.1.
German Flash Services PMI. Data is foreseen at 47.2 from previous 47.30
At 1.30pm –
Flash Manufacturing PMI. Data is foreseen at 44.00 from previous 43.50.
Flash Services PMI. Data is foreseen at 47.70 from previous 47.90
All above data and speech could have a volatile impact on the Euro.
Canda
At 6.00pm – Core Retail Sales m/m. Data is foreseen at 0.50% from previous -0.80%.
At 6.00pm – Retail Sales m/m. Data is foreseen at 0.4% from previous 0.1%.
Above data could have a neutral impact on the dollar.
U.S.
At 6.20pm- FOMC Member Cook Speaks
At 7.15pm –
Flash Manufacturing PMI. Data is Foreseen at 48.2, from previous 47.90.
Flash Services PMI. Data is foreseen at 50.70 from previous 50.50.
At 10.30pm – FOMC Member Kashkari Speaks.
All above data could have a positive impact on the dollar.