Forex Today: Dollar strong ahead of US first-tier events
|What you need to know on Wednesday, November 24:
The dollar extended its gains, reaching fresh 2021 highs vs the EUR and the GBP. EUR/USD bottomed for the day at 1.1225, while GBP/USD fell to 1.3341. The sour tone of global indexes and higher government bond yields fueled demand for the safe-haven dollar.
Bank of England governor Andrew Bailey said that the bank may not return to offering a hard form of guidance, according to Reuters. It is not off the table that we give no guidance at all on rates, with decisions to be made meeting by meeting, the governor added, before stating that the UK labour market is very tight.
USD rivals recovered modestly from their intraday lows despite Wall Street edging lower, weighed by a sell-off in the tech sector, with the Nasdaq Composite being the worst performer. The AUD/USD pair trades around 0.7220 while USD/CAD stands at 1.2680.
Higher US government bond yields pushed USD/JPY to its highest since March 2017, with the pair currently trading around 115.00.
Investors’ concerns are related to continued inflationary pressures affecting economic growth, alongside mounting concerns of the spread of coronavirus contagions in the northern hemisphere.
Gold shed over 1%, plummeting to $1,781.94 a troy ounce, now struggling to recover above 1,790. Crude oil prices, on the other hand, were sharply up on the back of an announcement from US President Joe Biden. He said that the Department of Energy would release 50 million barrels of oil from the Strategic Petroleum Reserve (SPR) in an attempt to lower high gasoline prices. Markets reacted pushing the barrel $3 higher, with WTI now around $78.50.
The focus will be on US data on Wednesday, as the country will release multiple relevant figures ahead of the Thanksgiving long weekend. Among other things, the calendar includes October Durable Goods Orders, the second estimate of the Q3 Gross Domestic Product, the latest FOMC Meeting Minutes and October core PCE inflation, foreseen at 4.1% from 3.6% previously.
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