Headlines: Little change on the dollar ahead of Thanksgiving holiday
Main news:
- Investors awaiting BOE meeting minutes to be released
- Crude oil advanced above $60 a barrel
Forex outlook:
The dollar was little changed as the market volume was thin ahead of the U.S. Thanksgiving holiday on Thursday and the lack of key U.S. economic data. Federal Reserve Governor Kevin Warsh said on Tuesday inflation in the U.S. is still too high and there are “clear” risks it won't slow as investors expect, while the economy should rebound from its third-quarter performance.
The yen has been under pressure, as minutes of the Bank of Japan's policy meeting in October stoked speculation among investors it will delay raising interest rates until next year. The yen traded at 151.33 per euro compared with 151.27. It reached a record low of 151.67 on Monday. The currency was at 118.04 against the dollar from 118.05. Investors are favoring the euro with expectation that ECB will lift rates again next month to 3.50 percent contrast with low Japanese interest rates, after ECB President Jean-Claude Trichet, in Sydney, called for “alertness” on inflation, suggesting rates will keep increasing next year.
Canada's dollar touched a seven- month low of 1.1477 against the U.S. dollar, after the nation's retail sales dropped in September by more than expected. Many investors are betting on Tuesday’s weak economic numbers will lead to further negative perception of the Canadian dollar and more Canada selling. As today, the consumer price index is due to be released in Canada, which measures the inflation experienced by consumers when purchasing goods and services.
Also the Bank of England Meeting Minutes today will give investors some insight into the latest interest rate decision.
Gold: Gold futures for rose 1.1 percent to $628.70 an ounce on Tuesday, the biggest gain since 9 Nov, as a rally in the cost of crude oil boosted the appeal of the precious metal as a hedge against inflation. Investors are seeing bullish market on gold as there is good buying and crude oil will help support gold as well.
Crude Oil: Crude oil rose the most in almost a month to $60 a barrel after the Trans-Alaska Pipeline System limited the amount of oil it will carry and a North Sea platform was shut because of a gas leak. Investors are still expecting government data today to show that U.S. crude stocks rose by 700,000 barrels last week according to forecast. However, distillate stocks including winter heating oil are likely to have fallen by 1.2 million barrels.
