Forex Today: Markets settle down as focus shifts to key data, Powell speech

Eren Sengezer FXStreet

Here is what you need to know on Wednesday, November 30:

Markets stay relatively quiet on the last trading day of November as investors move to the sidelines while awaiting key data releases. After having closed the first two days of the week in positive territory, US Dollar Index fluctuates in a tight range near 106.50 and the US stock index futures trade virtually unchanged on the day. Eurostat will release the Harmonised Index of Consumer Prices (HICP) data for November and the ADP will publish the private sector employment report for the US. Third-quarter US Gross Domestic Product (GDP) growth (second estimate) and the Federal Reserve's Beige Book will also be looked upon for fresh impetus. Most importantly, FOMC Chairman Jerome Powell will speak for the last time before the Fed goes into a two-week blackout period on Saturday.

Earlier in the day, the data from China showed that the NBS Manufacturing PMI declined to 48 in November from 49.2 in October and the Non-Manufacturing PMI dropped to 46.7 from 48.7. These prints revealed that the business activity continued to contract at an accelerating pace. On Tuesday, China's National Health Commission announced that they will strengthen vaccinations for the elderly and officials said that Guangdong province will allow close contacts of Covid cases to quarantine at home. Investors are having a difficult time figuring out whether China will move away from its zero-Covid policy. Reflecting the indecisiveness, the Shanghai Composite Index was last seen losing 0.15% on the day and Hong Kong's Hang Seng Index was up 0.3%.

The Wall Street Journal and Reuters both reported on Tuesday that OPEC+ was likely to maintain its current output strategy when the group meets on December 4. The barrel of West Texas Intermediate (WTI) gained more than 3% on Tuesday before going into a consolidation phase near $79 early Wednesday. Rising crude oil prices, however, failed to help the Canadian Dollar find demand.

USD/CAD reached its highest level in nearly four weeks above 1.3600 on Tuesday after Statistics Canada reported that the real GDP expanded at an annual rate of 2.9% in the third quarter, missing the market expectation of 3.5% by a wide margin. The pair was last seen moving sideways slightly below 1.3600.

USD/JPY is having a difficult time making a decisive move in either direction and continuing to fluctuate below 139.00 mid-week. The data from Japan revealed that Industrial Production decreased by 2.6% on a monthly basis in October following September's 1.7% decline.

EUR/USD closed modestly lower after having met resistance near 1.0400 on Tuesday. The pair moves sideways at around 1.0350 in the early European morning.

Eurozone Inflation Preview: EUR/USD fate hinges on confirmation of peak inflation.

GBP/USD turned south during the American trading hours on Tuesday and closed the day below 1.2000. While testifying before the Lords Economic Affairs Committee, Bank of Governor Andrew Bailey acknowledged that the UK labour market has turned out to be much more constrained than they thought.

Gold price gathered bullish momentum and climbed toward $1,760 on Tuesday on renewed optimism about China further easing restrictions. Rising US Treasury bond yields, however, caused XAU/USD to erase a portion of its daily gains. The pair holds its ground early Wednesday and posts small daily gains slightly above $1,750.

Bitcoin gathered bullish momentum during the Asian trading hours and climbed above $1,700 before retreating below that level into the European session. Ethereum gained more than 4% and managed to extend its rally toward $1,300 early Wednesday. ETH/USD was last seen rising 4.5% on the day at $1,270.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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