During the Asian session on Friday (November 25), the U.S. dollar index hovered at a low level and is currently trading around 105.87. Before that, the U.S. dollar index fell for three consecutive trading days. It hit a low of 0.27% on Thursday and closed at 105.85, a drop of about 0.27%. Follow below The 200-day moving average is supported near 105.33; the previously released minutes of the US Federal Reserve’s November meeting supported the view that it will slow down interest rate hikes from the December meeting, which is a significant drag on the dollar, even though Thursday is the US Thanksgiving holiday.
Non-US currencies generally rose, and the New Zealand dollar and the British pound rose more strongly. The British pound continued to hit a new high of more than three months against the US dollar to 1.2153 on Thursday, and the New Zealand dollar continued to hit a new high of more than three months against the US dollar to 0.6288 on Thursday.
The closely watched minutes of the Nov. 1-2 meeting showed officials were largely comfortable that they could now ease the pace of rate hikes, which could happen next month after four straight hikes of 75 basis points. interest rate of 50 basis points.
“The Fed will be happy to raise rates by 50 basis points in December and 25 basis points from the first meeting next year,” said Niels Christensen, chief economist at Nordea, noting that the Fed would still feel the need to take further action to Lower inflation.
“As long as the Fed sees a strengthening labor market, it won’t be too worried about tightening,” Christensen said.
The U.S. dollar index, which measures the U.S. dollar against six major rival currencies, fell 0.27% on Thursday to close at 105.85 after slipping 1.1% on Wednesday. Point supports are also around this location.
The Federal Reserve has raised interest rates to the highest level since 2008, but slightly weaker-than-expected U.S. consumer price data stoked hopes for a slower pace of rate hikes.
Those hopes sent the dollar index down 5.2 percent in November, putting it on track for its worst monthly performance in 12 years.
Nordea’s Christensen added: “After the euro bounced higher against the dollar in the first half of November, there have not been as many dollar buyers recently.”
The euro held onto gains after minutes from the European Central Bank’s October meeting showed policymakers worried that inflation could become entrenched, providing the case for further rate hikes.
It closed at 1.0410 on Thursday, an increase of about 0.14%, initially standing above the 200-day moving average of 1.0387.
It rose 0.48% on Thursday to close at 1.2112. The highest intraday hit was 1.2153, a new high since August 15. The resistance of the 200-day moving average was around 1.2182.Aside from dollar weakness, BOE deputy governor voiced support for further rate hikes, also lending support to sterling
NZD/USDIt rose 0.3% on Thursday to close at 0.6264. The intraday high hit 0.6288, a new high since August 19. The resistance of the 200-day moving average was around 0.6297. After the New Zealand Federal Reserve raised interest rates by 75 basis points on Wednesday, the chairman of the New Zealand Federal Reserve on Thursday emphasized that it will further raise interest rates, providing support for the exchange rate.
Following the trend of the dollar, the dollar fell 0.68% against the yen on Thursday, falling for the third consecutive trading day, reaching as low as 138.04. The near three-month low hit on November 15 was supported around 137.66.
U.S. markets were closed for Thanksgiving on Thursday, and liquidity was thinner than usual. U.S. markets were generally closed early on Friday, and overall trading is expected to remain limited.
Important economic data and events for Friday
Institutional view
TickMill, a foreign exchange brokerage company: The recent fall in the dollar has given the pound a chance to recover
The dollar’s recent fall has played a large role in the recovery of the pound against the dollar. Analyst James Harte said in a note: “With some high-level investors buying sterling at the September lows, more cautious investors are likely to join in the action, which should see prices continue to move higher for now. Keeping sterling supported in the near term.”The next U.S. inflation data will be key to the direction of sterling against the dollar, with further cooling in inflation likely prompting the Fed to raise interest rates modestly in December, while rising inflation could lead to a larger rate hike.
Citi: Euro zone inflation expected to fall in November for first time in more than two years
Citigroup said that the November euro zone inflation data is an important data released before the European Central Bank’s December meeting, and it is expected that November euro zone inflation will decline for the first time since mid-2020. The decline in inflation is expected to be driven by energy, but core inflation is expected to remain strong. Headline inflation in the euro zone is expected to have fallen to 10.3% in November from 10.6% in October. However, the economist warned that this may not be the start of a real downturn in inflation. Germany’s latest wage deal is a reminder that news on inflation still looks set to be skewed to the upside.
TD Securities: The Turkish lira may continue to fall but the space is limited, delaying the expected time for the lira to fall to 27
The Turkish lira could fall amid price instability, but short-term losses will remain limited due to fundamental interventions supporting the lira and improving risk appetite. Turkey’s central bank decided on Thursday to cut interest rates by 150 basis points to 9.0% and end the cycle of rate cuts. The inflation-adjusted real interest rate will drop to -75.5%. USD/TRY remained in a tight range, however, as interventions and more favorable market conditions offset negative real interest rates. For these reasons, TD Securities has pushed back its expected USD/TRY rise to 27 from an initial Q4 2022 to Q1 2023.
Commerzbank: German economy will decline, but not collapse
The IFO business climate index rose sharply to 86.3 in November from 84.5 in October, suggesting companies are seeing some improvement in the economic environment, Commerzbank chief economist Joerg Kraemer said in a report. The economist attributes this improvement to the fact that risks to gas supplies have eased significantly in recent weeks, with supply shortages easing as the German government significantly increased its bailout package. The signs allayed fears that the German economy would fall into a deep recession like the 2008-09 financial crisis or after the COVID-19 pandemic. So continue to expect a recession in the German economy, but not a collapse.
ING Bank: European currencies unlikely to recover smoothly
Economists at ING Bank do not expect the recovery of European currencies to be smooth as energy prices rise. European currencies are currently rebounding strongly as lower energy prices (crude oil hit by EU oil price cap proposals) and higher than expected PMI data have provided some support to market sentiment in Europe ahead of dovish Fed minutes . But economists remain skeptical that European currencies will recover smoothly, and the agency’s commodity team continues to see upside risks to energy prices in the new year.