Forex Today: US Dollar stabilizes ahead of key data, Fed policy decisions


Here is what you need to know on Wednesday, November 1:

The US Dollar (USD) stays relatively quiet early Wednesday after posting strong gains against its major rivals on Tuesday. ADP Employment Change and ISM Manufacturing PMI data for October will be featured in the US economic docket alongside JOLTS Job Openings for September. Later in the session, the Federal Reserve (Fed) will announce monetary policy decisions and Chairman Jerome Powell will speak on the outlook in a press conference.

ISM Manufacturing PMI Preview: Elevated investment set to boost index, US Dollar.

ADP Jobs Preview: A rebound that could not matter.

After opening lower, Wall Street's main indexes gained traction and posted modest gains on Tuesday. Despite the upbeat mood, the USD held its ground on rising US Treasury bond yields. Additionally, month-end flows on the last day of October provided an additional boost to the currency. The US Dollar Index rose more than 0.5% and erased Monday's losses before going into a consolidation phase above 106.50 on Wednesday. In the meantime, US stock index futures were last seen trading modestly lower on the day, while the 10-year yield was fluctuating in a narrow channel at around 4.9%.

US Dollar price this week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   -0.10% -0.28% 0.08% 0.00% 1.04% -0.13% 0.75%
EUR 0.09%   -0.18% 0.17% 0.10% 1.13% -0.04% 0.84%
GBP 0.28% 0.18%   0.32% 0.26% 1.31% 0.13% 1.03%
CAD -0.05% -0.17% -0.35%   -0.07% 0.96% -0.21% 0.67%
AUD 0.00% -0.08% -0.26% 0.06%   1.05% -0.13% 0.77%
JPY -1.05% -1.15% -1.24% -1.00% -1.06%   -1.19% -0.28%
NZD 0.15% 0.03% -0.16% 0.21% 0.11% 1.17%   0.88%
CHF -0.75% -0.84% -1.03% -0.68% -0.75% 0.30% -0.88%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

 

The Fed is widely expected to leave its policy rate unchanged at 5.25%-5.5% for the second consecutive meeting. The statement language regarding the prospects for additional tightening and Chairman Powell's comments on the policy outlook could ramp up the volatility during the American trading hours. 

Federal Reserve Preview: Powell set to lift US Dollar by leaving door open to more hikes.

After rising to a weekly high above 1.0650, EUR/USD reversed its direction and closed in negative territory below 1.0600 on Tuesday. At the time of press, the pair was moving sideways slightly above 1.0550.

The data from New Zealand showed that Employment Change fell by 0.2% in the third quarter. This reading followed the 1% growth recorded in the second quarter and came in worse than the market expectation for an increase of 0.4%. Meanwhile, Caixin Manufacturing PMI in China dropped to 49.5 in October from 50.6 in September. NZD/USD came under bearish pressure and declined to the 0.5800 area following these disappointing data releases.

GBP/USD turned south and erased its daily gains after meeting resistance at 1.2200 on Tuesday. The pair holds steady at around 1.2150 early Wednesday.

USD/JPY gathered bullish momentum on the Bank of Japan's inaction on policy and reached its highest level in a year above 151.70 on Tuesday. During the Asian trading hours on Wednesday, Japan's top currency diplomat Masato Kanda said that they were concerned about one-sided sharp movements in the foreign exchange markets and reiterated that they will not rule out any steps to respond. The pair turned negative on the day below 151.50 following this verbal intervention.

Gold climbed above $2,000 on Tuesday but profit-taking seemingly triggered a sharp drop. XAU/USD was last seen moving up and down near $1,980.

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