All eyes on the Federal Reserve rate decision today
Daily Currency Update
The US Dollar Index (DXY) ticked up slightly on the back of improved risk appetite ahead of the US Federal Reserve monetary policy decision due later today. The DXY traded at the 107.06 level. Strong consumer spending, tight labor market conditions, and a possible improvement in factory output have kept the US economy strong. The Fed is expected to keep doors open for further policy tightening while analysts expect a hold today. Fed Chairman Jerome Powell will likely stick to the bank's forecasts for another potential hike in December.Key Movers
The Eurozone report showed that the preliminary Harmonized Index of Consumer Prices for October, reduced to 2.9% from 4.3% prior, below the market anticipations of 3.1%. The seasonally adjusted gross domestic product (GDP) data year-over-year came in at 0.1% in Q3 compared to the 0.2% expected. The substantial slowing in consumer prices aligns with the market's anticipation that the European Central Bank (ECB) is unlikely to push for additional interest rate hikes. Furthermore, the scary risks of a recession may continue to undermine the EUR.In UK news, investors were unsure whether UK Prime Minister Rishi Sunak will fulfill his promise of halving inflation to 5.4% by year-end. Inflation in the UK economy is the highest among all the major economies due to robust wage growth. With constant inflation risks, the Bank of England (BoE) is expected to maintain the status quo as the economy is slowing down due to deteriorating labor demand.
The Reserve Bank of Australia (RBA) prepared to unveil its policy decision on November 7. Anticipations lean towards a 25 basis points (bps) increase in interest rates during the upcoming meeting, driven by heightened inflation.
The USD/CAD pair was up 0.02% this morning, gaining support ahead of the Federal Reserve rate decision. The Bank of Canada (BoC) Governor Tiff Macklem is scheduled to speak with Senior Deputy Governor Carolyn Rogers today. The release of Canada’s GDP data showed that the economy did not experience growth, remaining flat. This contradicted market predictions for a 0.1% growth. In oil news, the tension in the Middle East has raised concerns about potential disruptions in the oil supply. Crude oil prices have sunk to two-month lows putting pressure on the Canadian Dollar. Western Texas Intermediate (WTI) oil trades below $81.00 per barrel.
Expected Ranges
- EUR/USD: 1.0529 - 1.061 ▼
- GBP/USD: 1.2113 - 1.2159 ▼
- AUD/USD: 0.6318 - 0.6367 ▲
- USD/CAD: 1.386 - 1.3892 ▼