Forex News
- Gold struggles as expectations of more Fed rate hikes weigh on sentiment.
- Markets fully price in a December Fed rate hike, with a larger 50 bps move also on the table.
- XAU/USD struggles below its 21-day SMA, keeping the near-term technical outlook tilted to the downside.
Gold (XAU/USD) struggles to hold onto its earlier gains on Wednesday as a broadly stronger US Dollar (USD) weighs on the precious metal. The metal fell 2.67% the previous day, in the aftermath of hotter-than-expected US consumer inflation data and hawkish remarks from Federal Reserve (Fed) officials that fueled expectations of a more aggressive interest rate-hike path. At the time of writing, XAU/USD trades around $4,033, retreating from an intraday high of $4,066.
The US Consumer Price Index (CPI) rose 0.4% MoM in October, above the 0.3% forecast but down from 0.6% in September. Core CPI, which excludes food and energy, rose 0.3%, matching September’s pace and beating the 0.2% forecast.
Economists at Commerzbank caution that “prices are still rising too quickly, even though the increase was somewhat smaller than in September.” They highlight that “core inflation, a key gauge of the underlying trend, thus remains (too) high and is no longer trending downward,”. In their assessment, “the strong economy and the ongoing conflict in the Middle East suggest that inflation is unlikely to ease in the near term.”
Hawkish Fed signals boost expectations of a 50 bps hike
Before the CPI release, Fed Governor Christopher Waller said a half-point rate hike may be needed in December if October core CPI comes in “around 0.3% or higher.” With inflation meeting that threshold, traders have started pricing in the possibility of a larger move at the December meeting.
Other Fed officials, including Dallas Fed President Lorie Logan and Philadelphia Fed President Anna Paulson, also backed further monetary tightening, while Fed Vice Chair for Supervision Michelle Bowman stressed the need to bring inflation under control.
Markets now fully price in a rate hike in December, with an 88.5% chance of a 25-basis-point (bps) increase and an 11.5% chance of a 50 bps move, according to the CME FedWatch Tool. Traders also expect more rate hikes next year, with three additional quarter-point increases priced in by mid-2027.
US Dollar and Treasury yields rise as traders price in more rate hikes
The shift in rate expectations boosted demand for the US Dollar (USD) and triggered a sharp sell-off in US government bonds, particularly at the short end of the yield curve. The policy-sensitive 2-year Treasury yield jumped around 19 bps on Tuesday, while the benchmark 10-year yield climbed roughly 14 bps during the day, briefly moving back above 5%.
The US bond market is closed on Wednesday in observance of Veterans Day. Meanwhile, the Greenback extends its gains, with the US Dollar Index (DXY) trading around 102.70, approaching the year-to-date high of 102.94 reached in October.
The combination of a stronger US Dollar, elevated Treasury yields and growing expectations of further Fed tightening is likely to keep Gold under pressure. However, robust central bank buying and sustained inflows into Gold-backed exchange-traded funds (ETFs) could continue to provide a structural floor over the longer term.
Technical Analysis: Bears retain control below key daily SMAs
On the daily chart, XAU/USD maintains a bearish bias as it trades below the 21-day Simple Moving Average (SMA) at $4,057, as well as the 50-day and 100-day SMAs. The Relative Strength Index (RSI) hovers around 47, indicating neutral momentum, while the Moving Average Convergence Divergence (MACD) remains in positive territory, although fading green histogram bars suggest weakening bullish momentum.
On the topside, immediate resistance is at the 21-day SMA near $4,057, with further barriers at the 50-day SMA at $4,178 and the 100-day SMA at $4,201, where sellers are likely to defend the recent range highs. On the downside, the psychological $4,000 level acts as immediate support, followed by the yearly low of $3,870.23. A decisive break below the latter could expose Gold to further selling pressure.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- EUR/USD falls for a second straight day as the US Dollar strengthens across the board.
- Hotter-than-expected US inflation and hawkish Fed remarks fuel bets on further rate hikes.
- Uncertainty over French politics and public finances remains a drag on the Euro.
EUR/USD extends losses for the second straight day, slipping to a two-week low during Wednesday's American trading hours. The Euro (EUR) comes under pressure as the US Dollar (USD) strengthens across the board amid growing expectations of a more aggressive Federal Reserve (Fed) interest rate-hike path.
At the time of writing, the pair trades around 1.1116, down 0.42% on the day. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 102.70, approaching the year-to-date high of 102.94 reached in October.
Markets are now fully pricing in a Fed rate hike in December, with an 88.5% chance of a 25-basis-point (bps) increase and an 11.5% chance of a larger 50 bps move, according to the CME FedWatch Tool. Traders also expect further tightening next year, with three additional quarter-point increases priced in by mid-2027.
The shift in rate expectations follows hotter-than-expected US consumer inflation data released on Tuesday, along with calls from Fed officials for further monetary tightening. The US Consumer Price Index (CPI) rose 0.4% MoM in October, above the 0.3% forecast but down from 0.6% in September. Core CPI, which excludes food and energy, rose 0.3%, matching September’s pace and beating the 0.2% forecast.
Waller comments revive talk of 50bp Fed move and tilt risks toward the Dollar
Analysts at MUFG note that the latest repricing in rates has been driven less by the inflation data itself and more by the policy backdrop, with “the market rethink … to consider the prospect of a 50bp hike.” They stress that “this is only now being considered because of Waller’s comments before the CPI report rather than the CPI report itself,” after Fed Governor Waller suggested that “a stronger CPI print may warrant a 50bp hike.”
MUFG still sees such an outcome “more a risk than a core view”; they warn it would “alter the current balanced expectations in the markets across key central banks and shift rate hike expectations much more in favour of the dollar.” In turn, they argue this would “likely prompt a further lurch lower in EUR/USD and bring levels below the 1.1000-level into play.”
Across the Atlantic, persistent political and fiscal challenges in France, along with uncertainty over the possibility of an early departure by European Central Bank (ECB) President Christine Lagarde, add to the pressure on the Euro, even as the ECB maintains a hawkish policy stance. Traders anticipate another rate hike in December, which would mark the central bank's third increase this year, while also pricing in further increases in 2027.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.43% | 0.36% | 0.40% | 0.31% | 0.20% | 0.48% | 0.66% | |
| EUR | -0.43% | -0.07% | -0.02% | -0.12% | -0.24% | 0.04% | 0.22% | |
| GBP | -0.36% | 0.07% | 0.04% | -0.05% | -0.17% | 0.11% | 0.29% | |
| JPY | -0.40% | 0.02% | -0.04% | -0.09% | -0.20% | 0.07% | 0.25% | |
| CAD | -0.31% | 0.12% | 0.05% | 0.09% | -0.11% | 0.16% | 0.35% | |
| AUD | -0.20% | 0.24% | 0.17% | 0.20% | 0.11% | 0.29% | 0.46% | |
| NZD | -0.48% | -0.04% | -0.11% | -0.07% | -0.16% | -0.29% | 0.19% | |
| CHF | -0.66% | -0.22% | -0.29% | -0.25% | -0.35% | -0.46% | -0.19% |
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 US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Deutsche Bank economists Sanjay Raja and Maui Brennan expect UK inflation to move higher in October, driven by energy, tobacco and modest food and services gains. They forecast headline CPI at 3.80% year-on-year, with Core CPI and Services CPI also rising. Looking ahead, they see headline CPI pushing closer to 4.25% early next year, with price pressures remaining sticky.
Deutsche Bank flags renewed inflation pressures
"After broadly matching expectations in September, we expect UK inflation to rise further in October."
"First, energy prices are set to push even higher as we enter the final quarter of the year, with the Ofgem Price Cap up, heating oil prices up, and petrol and diesel prices up too. Second, tobacco duty will also be a prominent feature of the October inflation report, with higher duties on vapes and tobacco kicking in."
"We expect headline CPI to have risen to 3.80% y-o-y (Sep-26: 3.48%). Core CPI, we think, will have jumped by 2.87% y-o-y (Sep-26: 2.78%). Services CPI, we project, will have edged up to 3.87% y-o-y (Sep-26: 3.72%)."
"We continue to see headline CPI pushing closer to 4.25% y-o-y at the start of next year."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Societe Generale’s Kit Juckes argues that despite potential future US fiscal tightening and greater AI regulation, current data show a resilient US economy. Core CPI has risen steadily, with headline CPI up 1% over two months, alongside strong payrolls, retail sales and GDP.
Resilient data back US currency
"It is possible, though by no means certain, that US fiscal policy will be tightened as the President and Congress struggle to reach agreement, and it is widely assumed that the AI industry will face greater Congressional scrutiny."
"Over the past two months, core CPI has risen by 0.3% month-on-month in each release, while headline CPI has increased by 1% over the same period."
"A large upside surprise in payroll growth is probably more noise than substance, but we have also seen stronger-than-expected retail sales and GDP data."
"The bottom line is that there may be storm clouds gathering beyond the horizon, but for now the US economy continues to outperform most others."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/CAD rallies nearly 2% in less than one week and hits fresh four-week highs at 1.4230 so far.
- Hotter-than-expected US inflation and a solid labour market have cemented hopes of at least a quarter-point rate hike at the next Fed meeting.
- The diverging employment data between the US and Canada released on Friday is likely to keep the pair above 1.4000, according to TD Securities' experts.
The Canadian Dollar (CAD) has resumed its downtrend, with the US Dollar (USD) rallying across the board on Wednesday as investors ramp up hopes of Federal Reserve (Fed) tightening in December. The USD/CAD pair trades at fresh four-week highs at 1.4230 at the US session opening, after rallying nearly 2% in less than a week.
Speculative investors have boosted the Greenback since the US Bureau of Labour Statistics (BLS) revealed that consumer inflation grew beyond expectations in October. These figures, coupled with the bright Nonfarm Payrolls (NFP) report released on Friday, have boosted expectations that the Fed will hike rates by at least a quarter-point at its December meeting.
Fed officials support bets of at least a quarter-point hike in December
These hopes were supported by Fed officials late Tuesday, as the President of the Philadelphia Fed, Anna Paulson, hinted at “further gradual tightening” ahead to bring inflation to target. The President of the Dallas Fed, Lorie Logan, highlighted a similar stance, affirming that “the Fed needs at least two more quarter-percentage-point increases.”
Before the US Consumer Price Index (CPI) release, Fed Governor Christopher Waller had stated that he would back a 25-basis-point hike if inflation came at 0.3% or higher –it came out 0.4% up, finally–, adding that “I believe a 50-basis-point hike in the policy rate should be considered”. Futures markets ramped up bets of a jumbo rate hike in December to 12% from practically none last week, according to data by the CME’s FedWatch Tool.
In Canada, the scenario is quite different, as October's employment report, which was released simultaneously with the US NFP data, showed a net loss in employment and rising unemployment. Analysts at TD Securities argue that “diverging employment data releases will likely keep USDCAD supported above 1.40,” as a “rising unemployment rate amid falling wage growth rate in Canada also reduces the market pricing of a December BoC rate hike relative to the Fed.” In their view, this combination of softer Canadian labour dynamics and a comparatively more hawkish Fed should keep the Canadian Dollar under pressure for now.
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
The Japanese Yen (JPY) is showing signs of a medium-term structural turnaround as market focus shifts toward Bank of Japan (BoJ) policy normalization, domestic economic resilience, and heightened currency intervention risks near the 160.00 threshold. Although post-US Consumer Price Index (CPI) inflation data temporarily pushed USD/JPY back toward key resistance at 159.00–160.00, solid Japanese manufacturing sentiment, firm wage growth, and expanding demand for Japanese Government Bonds (JGBs) are bolstering confidence that BoJ interest rates are heading toward neutral. Institutional strategists at ING and MUFG argue that while short-term US Dollar (USD) strength presents an upside test for USD/JPY, rising domestic yields and official intervention threats make the Yen increasingly attractive at current levels.
ING expects improving Japanese data and 2% inflation stability to pave way for BoJ tightening
Chris Turner at ING reports that improving manufacturing sentiment — backed by solid corporate earnings, rising wages, and AI-driven data center demand — is solidifying the Bank of Japan’s view that inflation is sustainably anchored at 2.00%. While broad US Dollar strength may briefly test technical resistance at 159.00, Turner anticipates that any move above 160.00 will prompt investors to aggressively buy cheap Yen.
"All of the above can feed into the Bank of Japan's view that inflation is now stable at 2.00% and its accommodative monetary policy can be reined in... The broadly strong dollar means that USD/JPY could easily push through resistance at 159, but we increasingly think investors will be looking to acquire cheap yen should USD/JPY push above 160 again."
MUFG sees medium-term Yen strength driven by JGB inflows and BoJ neutral rate proximity
Derek Halpenny at MUFG emphasizes that while US inflation figures pushed USD/JPY back toward 160.00, official intervention risks and improving sentiment in the JGB market heavily skew medium-term risks toward Yen appreciation. With the BoJ nearing its neutral rate and potential tax incentives emerging to encourage domestic bond purchases, Halpenny sees a compelling case for a sustained turnaround in the Yen.
"The yen weakened sharply yesterday in response to the US inflation data and USD/JPY has returned closer to the 160-level, above which intervention becomes a much greater prospect... There continue to be signs that confidence in the JGB market has improved, no doubt helped by the more active BoJ and the general consensus that within one or two hikes, the BoJ would be at the neutral policy rate... There is also growing speculation that the government will soon make changes to incentivise JGB buying by including individual JGB holdings in tax-free NISA accounts and/or removing these holdings from inheritance tax... With intervention likely halting the prospects to the upside, and confidence in the BoJ improving, the risks certainly look more skewed to yen strength over the medium term."
Key Takeaway
The Japanese Yen is approaching a pivotal turning point where domestic monetary normalization and rising JGB demand are beginning to counter external yield pressures. While ING notes that short-term USD momentum could push USD/JPY toward 159.00, both ING and MUFG agree that official intervention threats above 160.00, combined with a Bank of Japan that is within 1–2 rate hikes of its neutral rate, position the Yen for medium-term recovery.
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/JPY hits a two-month low 2 as stronger-than-expected US inflation and hawkish Fed remarks lift the US Dollar.
- Markets fully price in a December Fed rate hike, with an 11.5% chance of a half-point move.
- The wide US–Japan interest rate gap weighs on the Japanese Yen, but the risk of another intervention keeps traders cautious.
USD/JPY edges higher on Wednesday, extending gains for the second straight day as expectations of a more hawkish Federal Reserve (Fed) outlook renew bullish momentum in the US Dollar (USD). At the time of writing, the pair trades around 159.13, up 0.24% on the day, its highest level since September 2.
Stronger-than-expected US consumer inflation data released on Tuesday, along with calls from Fed officials for further monetary policy tightening, have strengthened the Greenback. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 102.50, approaching the year-to-date high of 102.94 reached in October.
The US Consumer Price Index (CPI) rose 0.4% MoM in October, above the 0.3% forecast but down from 0.6% in September. Core CPI, which excludes food and energy, rose 0.3%, matching September’s pace and beating the 0.2% forecast.
Fed Governor Christopher Waller said a half-point rate hike may be needed in December if October core CPI comes in “around 0.3% or higher.” Other officials, including Dallas Fed President Lorie Logan and Philadelphia Fed President Anna Paulson, also backed further monetary tightening, while Fed Vice Chair for Supervision Michelle Bowman stressed the need to bring inflation under control.
Markets now fully price in a rate hike in December, with an 88.5% chance of a 25-basis-point (bps) increase and an 11.5% chance of a 50 bps move, according to the CME FedWatch Tool. Traders also expect more rate hikes next year, with three additional quarter-point increases priced in by mid-2027.
Meanwhile, the Japanese Yen (JPY) struggles as interest rates in Japan remain well below those in the US, with the Bank of Japan’s (BoJ) policy rate at 1.25%, compared with the Fed’s 3.75%-4.00% range. Although the BoJ remains on a gradual rate-hiking path, this offers limited support to the Yen, as prospects of further Fed tightening could keep the interest rate gap between the two countries wide.
Nevertheless, the risk of another currency intervention keeps traders cautious as USD/JPY approaches the 160 mark. Japan has already stepped into the market several times this year to support the Yen, including a record ¥7.98 trillion intervention on July 30. Finance Minister Satsuki Katayama warned earlier this month that authorities would act against disorderly or excessively speculative currency movements.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.24% | 0.25% | 0.24% | 0.31% | 0.06% | 0.28% | 0.49% | |
| EUR | -0.24% | 0.00% | 0.00% | 0.05% | -0.19% | 0.06% | 0.25% | |
| GBP | -0.25% | -0.01% | -0.02% | 0.05% | -0.22% | 0.03% | 0.24% | |
| JPY | -0.24% | 0.00% | 0.02% | 0.06% | -0.18% | 0.04% | 0.25% | |
| CAD | -0.31% | -0.05% | -0.05% | -0.06% | -0.24% | -0.02% | 0.19% | |
| AUD | -0.06% | 0.19% | 0.22% | 0.18% | 0.24% | 0.24% | 0.44% | |
| NZD | -0.28% | -0.06% | -0.03% | -0.04% | 0.02% | -0.24% | 0.21% | |
| CHF | -0.49% | -0.25% | -0.24% | -0.25% | -0.19% | -0.44% | -0.21% |
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
- WTI Oil gains more than $2 from Tuesday's lows and consolidates around $85.50.
- Growing scepticism about the fate of the peace negotiations in the Middle East has provided mild support to crude prices.
- US API Oil stocks increased against expectations in the first week of November, keeping Oil recovery limited.
Oil prices picked up from two-month lows on Wednesday as investors start to worry about the lack of progress in negotiations to reach a peace deal in the Middle East. The US benchmark West Texas Intermediate (WTI) Oil has appreciated more than $2 from Tuesday’s lows and consolidates around $85.50 during the European session.
Investors' optimism about a peace agreement between Washington and Tehran is starting to deteriorate as the days go by without any relevant advance in the talks, while attacks on vessels attempting to cross the Strait of Hormuz continue.
US officials maintain their optimistic view, pushing back the possibility of new attacks on Iran. Secretary of State Marco Rubio affirmed in a G7 meeting in Paris on Tuesday that ”there is no need for major combat operations” and President Donald Trump affirmed that he is keeping the war at “status quo”, although he warned that the US military is “locked and loaded”.
Attacks in the Strait of Hormuz continue
Meanwhile, the UK Maritime Trade Operations (UKMTO), an organisation surveying global sea trade, reported a new attack on an Oil tanker northeast of the coast of Oman on Tuesday, shortly after the US Defense Secretary Pete Hegseth affirmed that the US controls the Strait of Hormuz. Incidents of this sort have reduced Oil traffic to a trickle in a corridor that transported about 20% of global Oil supply before the war, boosting market fears of supply disruptions and keeping prices between 20% and 60% above pre-war levels for most of the last eight months.
Also on Tuesday, data from the American Petroleum Institute (API) showed that Crude Oil stocks increased by 9 million barrels in the week ending November 6, against market expectations of a 1-million-barrel drawdown and following a 5.2-million-barrel decline the previous week. These figures have helped limit WTI Oil’s recovery.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Societe Generale’s Kit Juckes notes that EUR/USD ‘fair value’ is near 1.1150 after the latest US CPI-driven rates move, leaving the pair stuck in a range. He stresses that the US economy continues to outperform and keeps a year-end EUR/USD target of 1.10. Upcoming US PPI data may draw extra focus following CPI.
Euro pair held in tight range
"Yesterday’s US rates reaction to the CPI data helped put EUR/USD ‘fair value’ at 1.1150, very close to where it is trading this morning."
"The bottom line is that there may be storm clouds gathering beyond the horizon, but for now the US economy continues to outperform most others."
"Our year-end EUR/USD target of 1.10 is not obsolete yet."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- The US Dollar Index jumps to near 102.52 as odds of a Fed 50 bps rate hike in December get traction.
- Fed’s Waller said before the US CPI release that higher or steady core figures could propel fears of a 50 bps interest rate increase.
- The US core CPI grew at a faster pace of 0.3% MoM in October vs. 0.2% estimates.
The US Dollar (USD) outperforms its major currency peers on Wednesday, as financial markets have started anticipating a bigger Federal Reserve (Fed) interest rate hike at the December policy meeting.
As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.3% higher to near 102.52. This is the highest level seen in almost four weeks.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.27% | 0.25% | 0.19% | 0.26% | -0.05% | 0.20% | 0.51% | |
| EUR | -0.27% | -0.02% | -0.09% | -0.03% | -0.33% | -0.06% | 0.24% | |
| GBP | -0.25% | 0.02% | -0.06% | 0.00% | -0.31% | -0.06% | 0.26% | |
| JPY | -0.19% | 0.09% | 0.06% | 0.06% | -0.24% | 0.00% | 0.32% | |
| CAD | -0.26% | 0.03% | -0.00% | -0.06% | -0.30% | -0.06% | 0.26% | |
| AUD | 0.05% | 0.33% | 0.31% | 0.24% | 0.30% | 0.26% | 0.56% | |
| NZD | -0.20% | 0.06% | 0.06% | -0.00% | 0.06% | -0.26% | 0.32% | |
| CHF | -0.51% | -0.24% | -0.26% | -0.32% | -0.26% | -0.56% | -0.32% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
What led markets to factor in a jumbo Fed rate hike?
Analysts at MUFG note that the latest market rethink has been “to consider the prospect of a 50bp hike,” stressing that this shift is “only now being considered because of Waller’s comments prior to the CPI report rather than the CPI report itself.” They highlight that “Waller’s comment that a stronger CPI print may warrant a 50bp hike has sparked a debate over whether Waller had knowledge of the CPI print,” helping to push front-end yields higher and reprice Fed expectations.
According to MUFG, “the OIS market is now partially pricing the risk of a 50bp hike on 9th December,” after Waller argued that “the sticky inflation and energy risks warrant the reversal of the 75bps of cuts and hence why wait two meetings to do that.”
Even so, the bank cautions against assuming a larger move is now the base case. “We remain sceptical of the need to hike by 50bps at this stage and suspect the majority will see the better risk-reward in going by 25bps,” they write, pointing out that “we still have another payrolls report (but no further CPI prints, although it’s the day after) before the FOMC meeting.” MUFG adds that “a strong print plus a rebound in crude oil after the recent sharp drop would be one scenario of a possible more aggressive hike,” keeping alive the risk that markets lean further toward a 50bp outcome.
The Consumer Price Index (CPI) data on Tuesday showed that headline inflation grew at a faster pace of 0.4% Month-on-Month (MoM) in October against 0.3% estimates. In the same period, the core CPI – which excludes volatile food and energy items – arrived at 0.3%, higher than expectations of 0.2%.
US Dollar Index Technical Analysis
On the daily chart, US Dollar Index Spot trades at 102.52, holding a bullish bias amid the sustainability above the 20-day Exponential Moving Average (EMA) at 101.91 and the breakout of the Bullish Flag pattern.
The Relative Strength Index (RSI) around 59 keeps a mildly constructive tone rather than signaling overbought conditions.
On the downside, immediate support is located near the 102.50 area, with the EMA 20 at 101.91 reinforcing underlying demand. On the topside, the major clear resistance is the descending trend barrier around 102.94; a daily close above this level would strengthen the bullish case and open room for a more decisive extension of the recent advance.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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