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The U.S. Dollar index (USDX) surged early on Wednesday, reaching as high as the 107.0 mark, only to retrace later in the session ending the day 0.07% lower at 106.50. The move in dollar value could be attributed to Federal Reserve Chairman Jerome Powell's statements after its two-day policy meeting, that could be interpreted as suggesting that the bank may be done raising interest rates. The outcome of the FOMC meeting was to leave rates unchanged at 5.25%-5.50% where they have been since July, and to acknowledge the economy's aggressive monetary policy launched more than a year ago that also carries plenty of risks.
According to the CME Group Fed Watch Tool, the possibility that rates will remain unchanged in December the same possibility is up to 80.4%, from 72.6% yesterday, while there is 19.6% chance for a rate hike.
In other news, the Bank of England will announce its latest monetary policy decision later in the session. Forecasts show that the BOE will follow in the footsteps of the ECB and the Fed, keeping rates on hold at 15-year highs. The country is dealing with an inflation rate of 6.7% for September, three times higher than its target.
On the European front, German unemployment data for October are due, along with manufacturing PMI numbers for individual European countries and the eurozone. In the U.S., some price action could be seen upon the release of weekly jobless claims and monthly factory orders.
The main highlight for Thursday is the release of Apple’s quarterly earnings after market closes, the world’s biggest company by market capitalization. So far, Alphabet, Amazon, Meta Platforms and Microsoft all exceeded earnings and revenue expectations for the latest quarter, indicating solid and healthy performance in the technology sector for the last quarter.
The EUR/USD pair ended the session above the 1.08570 mark as a weaker US Dollar after the Federal Open Market Committee policy meeting lent some support to the pair.
The FOMC decided to keep the federal funds rate unchanged. During the press conference. Powell stated that the current monetary policy is already restrictive. FOMC opens the door for another rate hike, but it does not seem very eager.
On Wednesday, the US Private sector payroll growth increased modestly in October but missed expectations. Meanwhile, the JOLTS jobs opening data unexpectedly rose to 9.553M, better than the expectation of 9.25M. The ISM Manufacturing PMI registered the lowest reading since July, dropping to 46.7 in October.
Market participants will monitor the German Unemployment rate, Spain, and Italy’s HCOB Manufacturing PMI on Thursday. Traders will also take more cues from ECB's Lane speech for fresh impetus. On the US docket, the US weekly Initial Jobless Claims will be due.
Gold prices remained flat on Wednesday after the U.S. central bank announced its widely expected decision to leave interest rates unchanged and Chair Jerome Powell said the question of rate cuts is not on their radar right now.
The Federal Reserve held interest rates steady but left the door open to a further increase in borrowing costs in a policy statement that acknowledged the U.S. economy’s surprising strength but also nodded to tighter financial conditions.
This week, gold prices have slightly pulled back after surpassing the key $2,000 level on Friday. Bullion rose over 7% in October, helped by strong safe-haven demand due to growing unrest in the Middle East.
Oil prices eased on Wednesday to a three-week low on a rising U.S. Dollar and after the U.S. Federal Reserve kept interest rates steady as expected but noted it would keep the door open to possible future rate hikes due to a strong U.S. economy.
In China, the world's largest oil importer, factory activity unexpectedly contracted in October, a private survey showed, adding to downbeat official figures from a day earlier. Focus still remains in the Israel-Hamas war and the possibility to lead to any supply disruptions.
U.S. stocks were higher after the close on Wednesday, as gains in the Technology, Utilities and Consumer Services sectors led shares higher. At the close in NYSE, the US 30 rose 0.95%, while the US 500 gained 1.52%, and the US Tech 100 gained 2.35%.
the U.S. Federal Reserve kept interest rates unchanged and comments from its top official fuelled investor optimism rate hikes were done even though the central bank left the door open for more. Trading was choppy at the start of Powell's press conference, but the major equity indexes started to regain lost ground after about 20 minutes, then went on to hit session highs.
Ahead in Thursday’s session, market participants will be monitoring key employment data including nonfarm payrolls, unemployment rate, average hourly earnings as well as factory orders.
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