The U.S. Dollar is trading in mostly positive ranges this morning following overnight session reaction to the Federal Reserve decision announcement.
Overview
While the take yesterday afternoon initially dented the greenback, the buck is now gaining from a market perspective that the Fed’s patience is due to a slow recovery that does not merit serious tightening other than taking back measures created to combat the pandemic’s worst economic effects. Additionally, this could mean other central bankers ease their willingness to heighten borrowing costs. Naturally, the dollar is gaining along with equity markets, which seem rejoiced the accommodative environment will remain.Thus far, the dollar rallied and knocked Euro down to some of its weakest levels of the year while reversing the entire 1.0% gain Pound experienced in October. Dollar guidance once again is up in the air as this assessment of where monetary policy is headed has to then be weighed against fiscal progress. Meanwhile, the economy is still attempting to normalize with labor figures this morning revealing less Initial and Continuing than expected.
Buck is playing safe-haven now, we shall see what could cause it to dwindle, but by now we know swings are wild and common.
What to Watch Today…
- No major economic events scheduled for today
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EUR
The Euro sank overnight following a very dovish Christine Lagarde in statements to the media at an event in Lisbon.
The European Central Bank leader was quick to dismiss the need to hike interest rates anytime soon, in fact, said 2022 was currently “off the charts.” Her mindset comes from the belief among her colleagues that inflationary pressures will ultimately ease as we get into 2022, with supply-chains normalizing and prices eventually slowing down in pace if not fall.
On our November Outlook, we certainly see a vulnerable Euro, one that can only be picked up by indicators showing something other than contractions and the Euro-zone rising in unison.
GBP
Sterling dropped by over 1.0% following the Bank of England’s decision to keep away from hiking its benchmark interest rate. The BOE admitted that the U.K. growth outlook weakened since August on supply issues, Furthermore, BOE Andrew Bailey warned that best on hiking interest rates seem to be high and to be careful with that thinking.
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