Forex News

Federal Reserve (Fed) Governor Stephen Miran spoke about the United States (US) financial regulatory framework at the Bank Policy Institute, in Washington DC on Wednesday. He claimed that he strongly supports United States (US) central bank's efforts to streamline bank regulations.

Key takeaways

'Strongly supports' US central bank's efforts to streamline bank regulations.

Fed should consider exempting treasuries and central bank reserves from bank leverage ratios.

It's 'possible' that Fed could shrink its balance sheet again in the future.

Hopes easing regulations could allow smaller Fed balance sheet.

Smaller Fed balance sheet would reduce interest payout to banks.

Supported Fed's decision to stop balance sheet run-off.

Would have supported immediate end to Fed's quantitative easing at October 28-29 policy meeting.

Size of Fed balance sheet is ultimately dictated by regulations.

Smaller fed balance sheet depends on peeling back regulations."

• The Minutes of the Fed’s October 28-29 monetary policy meeting will be published on Wednesday.
• Details surrounding the discussions on the decision to cut the policy rate by 25 bps will be scrutinized by investors.
• Markets are split on whether the Fed will cut the policy rate again in December.

The Minutes of the United States (US) Federal Reserve’s (Fed) October 28-29 monetary policy meeting will be published on Wednesday at 19:00 GMT. The US central bank decided to cut the policy rate by 25 basis points (bps) to the range of 3.75%-4% at that meeting, but Fed Governor Stephen Miran voted in favor of lowering the fed funds rate by 50 bps, while Kansas Fed President Jeff Schmid preferred no change.

Jerome Powell and company opted to reduce the policy rate in October

The Federal Open Market Committee (FOMC) decided to cut the interest rate by 25 bps in October, as widely anticipated. In the policy statement, the Fed acknowledged that job gains slowed and the unemployment rate edged up, but reiterated that inflation remained “somewhat elevated.” Additionally, the Fed announced that it will conclude the reduction of its aggregate securities holdings on December 1.

In the post-meeting press conference, Fed Chairman Jerome Powell noted that one more 25-bps rate cut in December “is not a foregone conclusion,” and added there were strongly differing opinions among policymakers on what the next step could be.

TD Securities analysts expect the FOMC Minutes to reveal the extent of the internal debate that led to a hawkish cut in October. “Since the meeting, the hawks have gained the upper-hand in public remarks amid a lack of official data releases. The end-of-QT October announcement will also get airtime in the minutes, as we expect reserve management purchases to be announced at the January FOMC,” they said.

When will FOMC Minutes be released and how could it affect the US Dollar?

The FOMC will release the Minutes of the October 28-29 policy meeting at 19:00 GMT on Wednesday.

According to the CME FedWatch Tool, markets are fully pricing in about a 50% chance of a 25-bps rate cut in December, down from nearly 70% a week earlier. This market positioning suggests that the US Dollar (USD) faces two-way near-term risk.

In case the publication suggests that policymakers are willing to keep the policy rate unchanged to buy time to assess the impact of the government shutdown on the economy, investors could lean toward a policy hold in December and allow the USD to gain some strength against its rivals. Conversely, the USD could have a difficult time staying resilient against other major currencies if Fed officials voice growing concerns over the labor market conditions while adopting an optimistic view on the inflation outlook.

Nevertheless, the market reaction to the FOMC Minutes could remain short-lived, as investors are likely to wait for the economic data backlog to clear before positioning themselves for a Fed rate cut or a policy hold in December.

Eren Sengezer, European Session Lead Analyst at FXStreet, shares a brief outlook for the USD Index:

“The Relative Strength Index (RSI) indicator on the daily chart edges higher to 58 after rebounding from the midline, reflecting increasing bullish momentum. On the upside, the 200-day Simple Moving Average (SMA) aligns as a key resistance level near 101.30. In case the USD Index makes a daily close above this level and starts using it as support, technical buyers could take action. In this scenario, 101.40 (Fibonacci 38.2% retracement level of the January-July downtrend) could be seen as the next resistance level.”

“Looking south, the first support area could be seen between 98.20 and 97.70 (100-day SMA, 50-day SMA, round number, 20-day SMA) ahead of 96.25 (end-point of the downtrend).”

• GBP/USD dips from 1.3154 to 1.3120 as markets brace for the November 26 Autumn Budget risks.
• UK CPI falls to 3.6% and core CPI to 3.4%, prompting renewed confidence that the BoE will cut rates in December.
• Traders await Fed minutes and Thursday’s NFP, with September jobs expected at 50K and key US data resuming next week.

GBP/USD edges modestly lower on Wednesday as inflation in the United Kingdom (UK) ticked lower in October, increasing the chance of an interest rate cut by the Bank of England (BoE) in December. At the time of writing, the pair trades at 1.3120 after reaching a peak of 1.3155.

Sterling eases after CPI cools further, boosting expectations for an 85%-probability rate cut ahead of next week’s Autumn Budget

The Office for National Statistics (ONS) revealed that the Consumer Price Index (CPI) dipped from 3.8% to 3.6% YoY in October, as expected. Core CPI slipped from 3.5% to 3.4% YoY, its lowest since March. The Pound Sterling (GBP) dipped as investors grew confident that the BoE may reduce borrowing costs at the December meeting.

The Pound could take a hit next week with the release of the Chancellor Rachel Reeves' Autumn Budget, on November 26.

Money markets had priced in an 85% chance of a quarter-percentage-point rate cut, according to LSE data.

In the US, Initial Jobless Claims for the week ended October 18 rose by 232K, triggering no reaction in financial markets. Besides traders waiting for the release of the Fed’s last meeting minutes, they are laser-focused on Thursday's Nonfarm Payrolls figures for September, which are expected to come at 50K, up from August’s 22K print.

The US Census Bureau announced that it would publish the September Retail Sales and Durable Goods Orders next week.

Ahead, Fed officials Governor Stephen Miran and regional Fed Presidents John Williams and Thomas Barkin will cross the wires.

GBP/USD Price Forecast: Technical outlook

Technically speaking, GBP/USD reached its lowest level in five days, at 1.3092, an indication that the downtrend continues. Momentum is bearish as depicted by the Relative Strength Index (RSI).

If GBP/USD cracks below 1.3100, the next support would be the last cycle low of 1.3010, hit in early November. Conversely, if buyers clear the 20-day SMA at 1.3173, the next key resistance in play would be 1.3200.

• Silver advances as risk-off sentiment boosts demand for safe assets.
• Investors stay cautious ahead of the FOMC Minutes and the delayed September jobs report.
• Market expectations for limited Federal Reserve rate cuts temper upside potential.

Silver (XAG/USD) rises firmly on Wednesday, up 2.10% on the day to $51.90 at the time of writing, supported by renewed safe-haven flows as global sentiment shifts into risk-off mode. 

The grey metal benefits from a widespread weakness across global Equities, prompting investors to reduce risk exposure. Concerns about stretched valuations in the technology sector, along with heightened uncertainty ahead of Nvidia’s earnings later in the day, are reinforcing demand for defensive assets such as Silver.

Caution prevails as markets await the Federal Open Market Committee (FOMC) Minutes, due later in the day, which should provide additional clarity on policymakers’ reluctance to commit to a December rate cut. While the Federal Reserve (Fed) delivered a 25-basis-point reduction in October, several officials have since expressed doubts about further easing amid persistent inflation risks and softening but resilient labour-market conditions.

This uncertainty is amplified by the delayed September Nonfarm Payrolls (NFP) report, now expected on Thursday. Recent labour indicators point to weaker momentum. The ADP Employment Change showed a modest contraction in private payrolls, while the backlog of weekly Jobless Claims has continued to build. Together, these signals reinforce a cooling trend in the US jobs market, although not yet enough to guarantee additional Fed cuts.

According to the CME FedWatch tool, the chance of a December rate cut has fallen sharply over the past week, reflecting traders’ recalibration of the policy outlook. This shift limits the downside in the US Dollar (USD) but has not been sufficient to curb safe-haven demand for precious metals. For Silver, the combination of geopolitical caution, weaker Equity markets and fragile labour data continues to offer broad support.

• EUR/GBP eases as traders digest inflation data from the UK and Eurozone.
• Eurozone HICP matches forecasts, keeping ECB policy expectations unchanged.
• UK inflation cools, reinforcing the case for a December BoE rate cut.

The Euro (EUR) pares back early strength against the British Pound (GBP) on Wednesday as traders digest a fresh round of inflation data from both the United Kingdom and the Eurozone. At the time of writing, EUR/GBP is trading around 0.8817, retreating from an intraday high near 0.8839.

Eurozone inflation figures offered no surprises, with October’s Harmonized Index of Consumer Prices (HICP) aligning fully with expectations. Headline HICP rose 0.2% MoM, matching the 0.2% reading from September.

On an annual basis, headline inflation came in at 2.1% YoY, exactly in line with both the consensus and the 2.1% pace seen a month earlier. Core HICP was 0.3% MoM, matching the forecast and unchanged from September’s 0.3% rise, while the yearly reading held at 2.4% YoY, matching expectations and consistent with last month’s 2.4% reading.

The steady set of inflation figures offered little incentive for the European Central Bank (ECB) to adjust its stance, reinforcing market expectations that interest rates will remain unchanged. According to the latest Reuters poll conducted between November 14-19, 84 of 90 economists expect the ECB to keep its deposit rate at 2.00% at the December meeting.

In the United Kingdom, the latest inflation release pointed to further easing in price pressures, strengthening the case for a potential interest rate cut by the Bank of England (BoE) in December. Headline Consumer Price Index (CPI) rose 0.4% MoM in October, in line with expectations after a flat reading in September.

On a yearly basis, CPI slowed to 3.6% YoY, matching the 3.6% forecast and down from 3.8% a month earlier. Core CPI also edged lower to 3.4% YoY from 3.5%, underscoring a gradual cooling in underlying inflation.

Beyond inflation, attention now shifts to the November 26 UK Budget, a key event risk for Sterling as markets assess the government’s fiscal direction. Investor sentiment remains cautious after recent changes in the government’s tax messaging, including the decision to drop a proposed income-tax rise.

Adding to the anticipation, Chancellor Rachel Reeves said today that “leaks ahead of the budget are not acceptable,” stressing that next week she will make “fair choices to deliver on the public’s priorities.” Prime Minister Keir Starmer also weighed in, noting that the upcoming Budget will be “based on Labour values.

The Japanese Yen (JPY) is weak, down 0.4% against the US Dollar (USD) and underperforming nearly all of the G10 currencies in an environment of broad-based USD strength, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Focus on BoJ and risks of tightening delay

""The yen is hitting fresh multi-month lows and pushing to levels last seen in late January, pressured by concerns about the BoJ’s independence and its implications on the outlook for relative central bank policy following comments from Finance Minister Katayama that stated an intention to adjust the BoJ/government accord."

"An adviser to Prime Minister Takaichi is also said to have stated that the BoJ is unlikely to raise rates before March, a considerable delay to expectations that had previously centered around a Q4 hike (either October—passed, or December—next meeting)."

"The short-term rates market is reflecting this drift in expectations, and now pricing only 8bpts of tightening for December, 19bpts for January, and 23bpts by March. For USD/JPY, we continue to highlight the absence of any meaningful resistance ahead of 157.50."

The Pound Sterling (USD) is soft, down a modest 0.2% against the US Dollar (USD) and a midperformer among the G10 in an environment of broad USD strength, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Markets digest as-expected CPI, price in BoE cut

"The UK CPI data were largely in line with expectations, coming in marginally above expectations on headline (3.6% y/y vs. 3.5% exp. & 3.8% prev.) while core was released as expected at 3.4% y/y. The UK budget is scheduled for next Thursday, November 26, and headline risk remains elevated with a focus on the government’s revenue generating measures."

"Last week’s OBR forecast adjustment softened the need for drastic fiscal changes, offering markets some reassurance about the government’s ability to adhere to self-imposed fiscal rules. BoE rate expectations have softened modestly, pricing 22bpts of easing for December and 52bpts by June, up 2bpts on the day."

The Euro (EUR) is entering Wednesday’s NA session flat against the US Dollar (USD) as it outperforms all of the G10 currencies in an environment of broad-based USD strength, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Final CPI cements neutral ECB

"Final euro area CPI figures were released in line with expectations, holding steady at 2.1% y/y (headline) and 2.4% y/y (core). The data offer little to change the outlook for euro area rates, with markets still pricing no material change in the ECB’s policy settings through October 2026."

"Broader developments are thus expected to continue to dominate as market participants assess the post-shutdown resumption of US data releases. Germany/US yield spreads have been climbing within their recent range, offering fundamental support to the EUR, as the market’s attention now turns to the release of preliminary PMI’s scheduled for Friday."

"The EUR’s latest pullback has been modest, and appears to have settled into tight range trading around 1.1580 support/congestion. Technical signals are broadly neutral, and the RSI is hovering just below the neutral threshold at 50. We continue to highlight the recent resistance that was observed around the 50 day MA (1.1652) and look to a near-term range bound between 1.1550 and 1.1650."

The Canadian Dollar (CAD) is little changed on the session as spot remains anchored around the 1.40 point, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

CAD holds range

"The CAD still looks relatively 'cheap' around current levels from a longer-term point of view and from the perspective of our shorter-term fair value estimate. The model indicates fair value at 1.3871 this morning, leaving the USD trading about one standard deviation above equilibrium still."

"The CAD’s lack of appeal reflects sluggish growth and ongoing trade uncertainty. A significant improvement in the CAD undertone seems unlikely absent more compelling fundamental drivers. BoC DG Vincent speaks on productivity at 12.45ET. Prepared comments hit the wires at 12.30ET and there will be an audience Q&A."

"Spot remains range-bound around the 1.40 point. The relatively large fall in the USD yesterday pressured support in the upper 1.39 range but the CAD was unable to sustain those gains. USDCAD losses from yesterday’s intraday high should at least reinforce short-term resistance in the 1.4060/80 zone. Support has shifted a little lower to 1.3975/80."