What you need to know on Thursday, November 4:
The American dollar ended Wednesday with modest losses against most of its major rivals, following the US Federal Reserve monetary policy announcement. The US central bank kept interest rates unchanged as expected, and announced the reduction of its asset purchases by $15 billion per month. The Fed will begin taper later this month with reductions in Treasuries purchases by $10 bln, and mortgage-backed securities by $5 bln.
Also, policymakers still think inflation will be “transitory” although Powell noted that supply chain issues will likely extend well into next year, which means inflation will also remain high. Utterly patient stance with inflation above 2%. Among other things, he also said that he would not want to surprise markets by changing the taper strategy, opposite to the statement that noted that they can adjust the strategy as needed.
His conservative stance put some pressure on the greenback while providing a boost to Wall Street, with the three major indexes reaching record highs. US Treasury yields advanced, with the yield on the 10-year Treasury note settling at 1.60%.
The EUR/USD pair is still incapable to advance beyond 1.1615, while GBP/USD trades near 1.3700. The AUD/USD pair recovered towards 0.7450, but the risk is skewed to the downside amid an also dovish RBA. The USD/CAD pair fell below 1.2400, despite weaker oil prices.
WTI settled around $80.00, down after US crude stocks rose by more than expected, while gasoline inventories hit a four-year low. Also, Iran nuclear talks are set to resume on November 29 in Vienna.
Gold plummeted ahead of the Fed’s decision, trimming part of their intraday losses ahead of the close. It finished the day at around $1,770.00 a troy ounce.
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