• USD: Lower, FOMC signals rates will remain low for an extended period, jobless claims drop sharply
  • JPY: Higher, Japan's export sales improve, Sakakibara says JPY may fall to 85.00
  • EUR: Higher, ECB may announce details of exit strategy at the December policy meeting
  • GBP: Higher, Q3 GDP revised up slightly
  • CAD and AUD: AUD & CAD higher, RBA rate hike speculation, Russia to add CAD to its reserves

Overview

The USD traded sharply lower Wednesday dropping to a 15 month low pressured by a number of factors. The main catalyst for today's USD decline was confirmation in Tuesday's release of the FOMC minutes for the November policy meeting that the Fed plans to maintain a low level of interest rates for an extended period. The FOMC minutes also stated that the Fed sees the USD depreciation as “orderly.” This statement is seen by some as a green light to sell the USD as the Fed indicates that it has no plans to support the USD. The JPY surged in reaction to report of improving Japanese export sales and trade balance and in reaction to news that China may allow some fine tuning of the Yuan rate. JPY was also supported by a statement from a former MOF official that the USD may fall to 8500 before Japanese officials consider intervention. European currencies were supported by the Fed rate outlook and improving risk appetite as equity markets firm with the EUR supported by a statement from an ECB official that the ECB will announce the details of its exit strategy at December 3rd policy meeting. GBP traded higher but gains were limited by the release of revised UK Q3 GDP which confirms that the UK economy is still in recession. Commodity currencies were supported by a surge to a new record high in the price of gold with the CAD supported by report that Russia plans to add CAD to its reserves and AUD supported by revived RBA rate hike speculation. Russian officials also said they may be   considering adding other currencies to their reserves. The Russian reserve statement may generate additional concern about US D reserve currency status. US economic data was mixed with jobless claims posting a sharp drop, personal spending rising more than expected, and durable goods came in weaker than expected. New home sales rose by 6.2% and Michigan consumer sentiment came in slightly above expectation.
 

Today’s US data: 

Initial jobless claims for week ending 11/21 dropped 35k to 466K, a reading of 501K was expected. Jobless claims are their lowest since September 13, 2008. October personal income rose 0.2% and consumption rose 0.7%. October durable goods declined by 0.6% and 1.3% ex. transportation. October new home sales rose to 430k, a reading of 410K was expected. Final Michigan consumer sentiment for November dropped was revised up to 67.4, a reading of 66 was expected.

Upcoming US data: 

No major US economic data is due for the remainder of the week with US markets closed Thursday for Thanksgiving Day holiday.No major US economic data is due for the remainder of the week with US markets closed Thursday for Thanksgiving Day holiday.