Dovish FOMC Minutes drag the USD lower
24 November 2022
Thursday brings us further weakening of the American Dollar which was boosted yesterday by the dovish FOMC Minutes. Bankers hinted that future hikes will not be as big as the previous ones. There were also some concerns about big rates negatively affecting the economy.
EURUSD climbs above the 1.37 resistance, which was a great support in May and June. USDJPY dropped sharply towards the 139 support, which is the key level for this pair. The breakout here can be a major sell signal in the mid-term and buyers should do everything in their power to avoid it. USDCHF dropped sharply towards a key support area created by a horizontal support on 0.937 and the long-term up trendline.
Commodities are mixed. Precious metals are enjoying the weaker USD and are climbing higher. On the other hand, Oil is dropping sharply, even despite the bigger-than-expected drop of Inventories, which we found out about yesterday. It is our understanding that the Covid cases in China are to blame here. Price is quickly approaching levels seen at the beginning of the week where there was a whipsaw movement created by the production increase rumor spread by the WSJ.
Indices reacted on the Minutes with rises, which is a pretty typical reaction for the dovish central bank. It looks like stock traders are all set and ready for another long-lasting bull market. The bottom of this crisis/recession seems to have been set in September and October and now it is time to price in a bright future.
The American Market is closed due to the Thanksgiving Day today and we can expect lower volatility throughout the day. The calendar is pretty empty with no Tier-1 data on the radar. The only number worth noticing will be published at the end of the day when we discover the Retail Sales from New Zealand.