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09/11/2023 - 08:48 UTCThe U.S. dollar started off this week on a positive note against most major currencies only to settle down on Wednesday, with the dollar index (USDX) almost unchanged for the day, trading close to the 105.4 level. The dollar is still under significant pressure and trading way below the high of 107.0 reached earlier this month due to recent indications by the Federal Reserve that suggest a possible ending to the central bank’s rate hiking cycle.
According to the CME Group Fed Watch Tool, the possibility that rates will remain unchanged in December is back up to 90.4% on Thursday, from 85% on Tuesday, while there is a 9.6% chance for a rate hike.
Very little price action was observed in the main US stock market indices on Wednesday, with the US 500 ending the session 0.06% lower, the US 30 was down 0.18% and the US tech 100 posted a minor loss of 0.07%. This move came following last week’s sharp gains as investors appear to remain on the sidelines watching Fed’s comments closely, waiting for signals on the path of interest rates and focused on the direction of Treasury yields.
In earnings news, Take-Two Interactive Software company surged by 5.15% after the company said it would release a trailer early next month for the latest installment in its best-selling "Grand Theft Auto" videogame franchise. Electric vehicle maker Lucid Group also plummeted, posting a 8.1% drop after trimming its production forecast.
In today’s calendar, Beyond Meat, Wynn Resorts, Plug Power Inc, Wix.com, GoodRx Holdings, Weibo, Illumina, Trade Desk and Inovio Pharmaceuticals are scheduled to release their quarterly earnings reports.
The main highlights for today involve speeches by ECB President Christine Lagarde and Fed Chairman Jerome Powell where traders will be on watch for possible monetary policy related hints. The consensus on global equity markets has improved lately, partly due to rising hopes that rate-hiking cycles by the Fed, the ECB and the Bank of England will most likely pause, and central banks could gradually shift to easing policies. In other news, U.S. unemployment claims are also included in today’s calendar where forecasts show a 218K increase, slightly above previous weeks’ 217K.
The EUR/USD pair posted minor gains on Wednesday ending the session 0.14% higher.
No surprises emerged from the final reading of the German Consumer Price Index (CPI), which showed an annual rate of 3.8%, the lowest level since August 2021. Data released on Wednesday showed that Retail Sales in the Euro area dropped 0.3% in September, slightly above the expected -0.2%.
On Thursday, the US will release the weekly Jobless Claims report, and Federal Reserve (Fed) Chair Jerome Powell will participate in a panel discussion titled "Monetary Challenges in a Global Economy." The market will closely watch the comments from Fed officials throughout the week, as they are not coming as dovish as expected, providing support to the US dollar.
Gold prices retreated for a third straight session on Wednesday ending the day 0.92% lower as investors looked for fresh cues on the U.S. central bank's interest rate stance.
A string of Fed officials warned this week that U.S. interest rates will remain higher for longer, and that markets should be wary of betting on any early rate cuts.
Waning safe-haven demand for gold also dented prices, as markets priced in a much lower risk premium from the Israel-Hamas war.
Oil prices retreated on Wednesday with WTI contact on iForex platform ending the day 2% lower to their lowest in more than three months on concerns over waning demand in the U.S. and China. Moreover, according to API U.S. crude oil stocks rose by almost 12 million barrels last week and if that is confirmed that would be the biggest build since February. the U.S. Energy Information Administration (EIA) has delayed release of weekly oil inventory data, usually on Wednesdays, until Nov. 15 to complete a systems upgrade.
U.S. main indexes ended the session on Wednesday with minor losses as market participants weighed Federal Reserve official’s recent comments for signals on the path of interest rates focused on the direction of Treasury yields. Comments from several central bank officials over the past few days left the door open for additional hikes, causing some uncertainty among investors.
Among earnings, companies including AstraZeneca PLC, ADR, Becton Dickinson, SoftBank, Honda Motor Co Lt and Li Auto Inc are scheduled to report results.
Investors will be monitoring fresh jobless claims data as well as a speech from Powell.
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