After experiencing lows due to restrictive monetary policy, the US dollar has bounced back from 103.17 to 103.50. Close attention is being paid to the US economic indicators like jobless claims, durable goods orders and more.
On Tuesday, the forex landscape witnessed a notable US Dollar (USD) rebound from monthly lows, marking a corrective move.
This resurgence came as market sentiment shifted away from the Federal Reserve’s recent decision not to raise rates further, with attention turning back to the broader growth narrative.
The US Dollar Index (DXY), which had touched its lowest level since August at 103.17, saw a reversal, climbing back above 103.50. The corrective move coincided with stable US yields.
The Federal Open Market Committee (FOMC) minutes revealed a cautious stance, indicating a willingness to tighten monetary policy further if inflation progress fell short. The focus on maintaining a restrictive policy until inflation aligns with objectives drove the Dollar’s initial decline.
On the forex front, the Euro (EUR/USD) experienced a dip after being rejected above 1.0950, with Eurostat set to release Consumer Confidence data. Conversely, the British Pound (GBP/USD) showcased strength, achieving its highest daily close since September, exceeding 1.2500. The optimism stemmed from hawkish comments by the Bank of England’s Monetary Policy Members.
USD/JPY demonstrated signs of stabilization, rebounding from a low of 147.08 to 148.30. Meanwhile, the Canadian Dollar (USD/CAD) showed indecision around 1.3700, reacting minimally to inflation data that indicated a 3.1% rise, slightly below market consensus.
The Australian Dollar (AUD/USD) lagged despite hawkish signals from the Reserve Bank of Australia. Governor Bullock’s comments failed to provide a lift, resulting in a downturn to the 0.6550 area, although the overall trend remains upward.
Gold experienced a notable surge in the precious metals market, reaching $2,007, and retraced slightly to the $2,000 level. The critical threshold to watch is $2,010.
As Wednesday unfolds, market participants eagerly anticipate key data releases, including the Australian Westpac Leading Index and speeches from RBA Governor Bullock. Later in the day, attention will shift to US economic indicators such as Jobless Claims, Durable Goods Orders, and the University of Michigan Consumer Sentiment survey ahead of the Thanksgiving holiday. The forex market reacts dynamically to global economic cues, keeping traders vigilant in navigating currency movements.
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