Dollar Index Slumps, Kiwi Up Ahead of RBNZ, Yen Rallies

Yields Tumble, Gold, Silver Prices Soar; Stocks Climb

Summary:

The Dollar Index slumped while gold and silver prices soared on hopes that the Fed may start easing policy sooner than expected. The US 10-year bond yield tumbled to 4.34% from 4.39%.

Federal Reserve Governor and American economist Christopher Waller, often seen as hawkish said there was “no need to keep interest rates really high if inflation consistently declines.”

The Dollar Index (DXY), which measures the Greenback’s value against a basket of 6 major currencies, slumped 0.45% to 102.75 (103.25), a fresh 3-month low.

The Euro (EUR/USD) rallied to 1.0988 from 1.0955 yesterday while Sterling (GBP/USD) rose to 1.2695, up from yesterday’s 1.2625. Broad based US Dollar weakness lifted both the Euro and the Pound.

Meantime the Kiwi (NZD/USD) found its wings, soaring 0.55% against the Dollar ahead of today’s RBNZ rate decision. New Zealand’s Reserve Bank is expected to keep its Official Cash Rate at 5.5%.

The Aussie Battler (AUD/USD) jumped to 0.6653 from 0.6603, buoyed by the overall weaker Greenback. The US Dollar settled lower against the Asian and Emerging Market Currencies. USD/CNH (Dollar-Offshore Chinese Yuan) slid to 7.1410 from 7.1650 while USD/THB (Dollar-Thai Baht).

Against the yield sensitive Japanese Yen, the Greenback plummeted to 147.45 from 148.65 yesterday.  In volatile trade, the USD/JPY soared to an overnight high at 148.83.

Wall Street stocks rallied on hopes that the Fed is done hiking interest rates. The DOW climbed to 35,430, up from yesterday’s 35,350. The US S&P 500 edged higher to 4,555 from 4,550.

Economic data released yesterday saw Japan’s BOJ Annual Core CPI drop to 3.0% from 3.4%, lower than forecasts at 3.4%. The Eurozone’s GFK Consumer Climate rose to 27.8 from -28.1 previously.

The US Conference Board’s November Consumer Confidence Index soared to 102.0 from a downward revised 99.1 previously, beating forecasts at 101.0.

EUR/USD – The shared currency extended its rally against the US Dollar, climbing 0.27% to 1.0988 in late New York. Overnight, the Euro soared to an overnight and 3-month high at 1.1009. The overnight low traded was at 1.0934.AUD/USD – The Aussie Battler rallied anew against the Greenback to 0.6653 against 0.6603 yesterday. The Australian Dollar soared to 0.6657, overnight highs, last seen in early August this year. The overnight low recorded was 0.6596.USD/JPY – In another volatile trading session, the Greenback soared to an overnight high at 148.83 before tumbling lower. The overnight low recorded for the Dollar was 147.32. The US Dollar was trading at 147.45 in late New York.GBP/USD – The British Pound gained versus the broadly based weaker US Dollar, settling at 1.2695, up from yesterday’s 1.2625. Sterling traded to an overnight low at 1.2607 while the overnight high recorded was at 1.2715.On the Lookout:

Today’s economic calendar kicks off with Australia’s Annual September CPI, which is forecast to fall to 5.2% from 5.6% (ACY Finlogix).

New Zealand’s RBNZ holds a Press Conference (1 pm Sydney) on its interest rate decision following its monetary policy meeting (12 noon Sydney).

Markets are expecting the RBNZ to hold policy steady, keeping the Overnight Cash Rate unchanged at 5.5%.

There are no other data releases from Asia. Italy starts off Europe with its Italian November Consumer Confidence report (f/c 102 from 101.6 previously – ACY Finlogix).

The UK is next with its UK October Mortgage Approvals (f/c 45K from 43.328K – ACY Finlogix) and UK October Consumer Credit (f/c GBP 1.5 billion from GBP 1.391 billion – ACY Finlogix).

Next up is the Eurozone November Economic Sentiment (f/c 93.7 from 93.3 previously – ACY Finlogix). Italy also releases its October PPI (m/m f/c 0.3% from 0.6%; y/y f/c -10.6 from -14.1 – ACY Finlogix).

The US rounds up today’s data releases with its US Preliminary GDP report (q/q f/c 5.0% from 4.9% - FX Street), US Preliminary GDP Price Index (q/q f/c 3.5% from 3.5% - FX Street), US Goods Trade Balance (f/c -USD 86.4 billion from an upward revised deficit of -USD 86.8 billion – FX Street).

The US Fed will also release its Beige Book (US economic activity).

Trading Perspective:

Expect the Greenback to remain under pressure on lower US yields on growing expectations that the Fed is basically done with hiking interest rates.

The benchmark US 10-year bond yield dropped 5 basis points to 4.34% in late New York. At the start of this week, the 10-year rate was at 4.47%.

That’s a whopping 13 basis points in 3 trading days. Overnight, the two-year US treasury yield tumbled to 4.74% from 4.89%. While other global bond yields fell on the back of lower US rates, their drop was less extensive.

Traders will focus on the economic data releases as well as further Fedspeak.

EUR/USD – The Euro closed firmer, at 1.0988 against yesterday’s close at 1.0955. The shared currency broke above 1.10 to 1.1009 overnight highs before easing. Look for immediate resistance today at 1.1010 followed by 1.1040. On the downside, immediate support can be found at 1.0960 and 1,0930 (overnight low traded was 1.0934). Expect the Euro to maintain its bid today, likely range: 1.0930-1.1030.USD/JPY – The Dollar plummeted against the Japanese Yen to finish at 147.45 in New York against yesterday’s close at 148.65. “What goes up must come down”, sang the 70’s renowned pop group, Blood Sweat and Tears. Immediate support lies at 147.30 followed by 147.00 and 146.70. On the topside look for immediate resistance at 147.80, 148.30 and 148.80. Look for more choppy trade today, likely between 147 and 149. Happy days!AUD/USD – The Aussie Dollar rebounded, jumping against the Greenback to 0.6653 (0.6603 yesterday). Immediate resistance today lies at 0.6670 (overnight high traded was 0.6666). The next resistance level is found at 0.6700 0.6730. On the downside, look for immediate support at 0.6620, 0.6590 (overnight low was 0.6596), and 0.6560. Look for more choppy trade in this currency pair, likely between 0.6600 and 0.6700. Looking to sell Aussie rallies. (Source: Finlogix.com)

GBP/USD – Sterling soared against the overall weaker US Dollar to 1.2695 from yesterday’s open at 1.2625. On the day, look for immediate resistance at 1.2715 (overnight high). The next resistance level lies at 1.2745 and 1.2785. Immediate support can be found at 1.2660, followed by 1.2630 and 1.2600 (overnight low traded was 1.2607). Look for the British Pound to trade a likely range today of 1.2610-1.2710.

Have a good Wednesday ahead all. Happy trading.

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