US dollar pared gains as markets prepare for the Fed’s rate announcement on Thursday.
US Dollar (USD) remains under selling pressure throughout the trading day on Thursday, with profit-taking pressure lingering after the Greenback posted its greatest performance in years in response to Donald Trump’s victory in the US presidential election.
Fed Chairman Powell not expected to answer political questions, but markets will be watching for his reaction to President-elect Donald Trump.
Traders’ attention now shifting to the Federal Reserve (Fed), which poised to lower interest rates by 25 basis points (bps) (bps) This Thursday. With the rate decision completely priced in, the spotlight will shift to Fed Chairman Jerome Powell, specifically on the inflation and rate projections for December and beyond in light of the US presidential election results.
The weekly Jobless Claims report about to be release adding weight to the US economic calendar. The quarterly Nonfarm Productivity and Unit Labor Costs reports will also influence price movements. The Fed will announce its rate decision around the conclusion of the trading day, follow by Fed Chairman Powell’s press conference shortly after.
Daily Market update: A little of everything.US Dollar index falls below 104-territory, unable to sustain Wednesday’s gains.
The US economic calendar began at 13:30 GMT with a series of data:
The initial jobless claims are for week ending November 1 came in at 221,000, as expected. Last week’s numbers were raised up to 218,000 from 216,000.
The preliminary measurement for third-quarter nonfarm productivity 2.2%, slightly lower than the 2.3% projection. The preceding quarter’s result was reduced down to 2.1% from 2.5%.
The preliminary third-quarter Unit Labor Cost came in significantly higher on all fronts. The current figure came in at 1.9%, exceeding the 0.5% estimate. The preceding quarter’s figure substantially raised up to 2.4% from 0.4%.
At 19:00 GMT, the Fed will announce its interest rate decision. The expected rate drop from 5% to 4.75%.
At 19:30 GMT, Fed Chairman Jerome Powell will take the stage to give a speech and discuss the latest rate decision. During the news conference, there will undoubtedly be questions about the Fed’s stance in light of the recent Trump presidential election victory.
Equities in the United States appear to be slow on Thursday. The winners were the losers from Wednesday, and European and Chinese markets expected to do well on Thursday.
According to the CME FedWatch Tool, there is a 70.8% possibility that the Federal Reserve will decrease interest rates by 50 basis points (bps) during its December 18 meeting. Assuming a 25-bps drop in November, another 25-bps cut could be predict in December. A smaller 28.4% likelihood exists for the interest rate to be 25 basis points lower than the present level in December, signaling that rates will not be decrease that month following the November rate reduction.
The 10-year benchmark rate in the United States currently trading at 4.39%, having previously reach 4.47%.
