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Despite the Wall Street rise overnight, risk sentiment remained subdued in Forex market on Friday, with Asian equities trading largely lower. The Caixin Manufacturing PMI in China unexpectedly increased to 50.7 in November. But it failed to thrill markets as factory activity in other important Asian areas remained slow due to weak global demand.
The US S&P 500 futures remain subdued as investors assess the likelihood of a US Federal Reserve (Fed) interest rate decrease. The US Core Personal Consumption Expenditures (PCE) Price Index climbed. At an annual rate of 3.0% in October, slowing from a three-month run of 3.4% readings. According to data released on Thursday. The Core is updated on a monthly basis. PCE inflation was unchanged in the reporting month. Missing a 0.1% gain predicted and down from a 0.4% print in September.
According to New York Fed Bank President John Williams, “in balancing the risks of too-high inflation and a weaker economy. And based on what I know now, my assessment is that we are at, or near, the peak level of the target range of the federal funds rate.”
Falling inflation in the United States bolstered dovish Fed forecasts. As did dovish statements from Fed officials. The US Dollar has returned to the red zone, along with US Treasury bond yields, halting the previous rally fueled by end-of-month short covering.
Markets continue to price a 48% increase. The CME Group’s FedWatch tool showed a 22% possibility of a rate drop in March next year, up from a 22% chance last week.
The US Dollar Index is currently trading near 103.30, consolidating weekly losses, while the benchmark 10-year US Treasury note yields are licking their wounds near 4.33%.
All eyes are now on Fed Chair Jerome Powell.
All eyes are now on Fed Chair Jerome Powell, who will make two appearances later in American trade. Powell is scheduled to talk at Spelman College in Georgia between 16:30 GMT and 19:00 GMT. His statements will be keenly studied for new signals on the Bank’s future interest rate path. Powell will make his final public appearance before the December 12-13 policy meeting. The Fed enters its ‘blackout period’ on Saturday.
Furthermore, the US ISM Manufacturing PMI data will be released throughout the US session, offering new US Dollar values.
Forex market movement in pairs.
In Forex market The ongoing US Dollar weakening is helping most major currencies. The Euro (EUR) appears to be the strongest currency ahead of the European opening bells. EURUSD is maintaining its recovery momentum above 1.0900, having touched fresh six-day lows at 1.0879 on Wednesday as bets on the European Central Bank (ECB) cutting interest rates increased in response to worse Eurozone inflation data. Traders will be looking forward to the final Eurozone Manufacturing PMI later in the day, ahead of the address by ECB President Christine Lagarde.
GBPUSD is regaining ground toward 1.2650, finding support from hawkish comments from the Bank of England. Megan Greene, a hawkish dissenter on the BoE, stated on Thursday, the Federal Reserve said, “…the policy may have to be restrictive for an extended period of time in order return inflation to 2% over the medium term.” The final UK S&P Global Manufacturing PMI data is awaited, although it is unlikely to affect the Pound Sterling.
Strong Chinese Caixin PMI data and a widely weaker US Dollar fail to inspire Antipodeans. As a cautious market atmosphere underwhelms. The AUDUSD is testing the 0.6600 level after reversing an early advance to 0.6630. while the NZDUSD is unchanged near 0.6150.
As USDJPY returns over 148.00, the Japanese Yen is partially reversing its weekly gain. Against the US Dollar. The USDCAD is nursing its wounds near 1.3550. As it awaits top-tier Canadian job data.
WTI is regaining ground to near-record levels $76 following the disappointment of the OPEC+ decision. Saudi Arabia, Russia, and other OPEC+ members agreed to voluntary output cutbacks. In the first quarter of 2024. Angola. On the other hand, rejected the alliance’s increased output quota.
The gold price is returning to $2,050, supported by dovish Fed predictions.
