Noor Trends News, Technical Analysis, Educational Tools and Recommendations
The U. S. dollar closed Wednesday with modest losses against most of its major rival currencies, following the Federal Reserve Bank’s monetary policy announcement.
Fed kept interest rates unchanged as expected, and announced the reduction of its asset purchases by $15 billion per month. The Fed will begin taper later this month with reductions in Treasuries purchases by $10 billion, and mortgage-backed securities by $5 billion.
Policymakers still believe inflation will be transitory, although Powell noted that supply chain difficulties will extend well into 2022, which means inflation will also remain high.
Jerome Powell has adopted a conservative and ultra-patient stance with inflation above 2%. Among other things, he also indicated that he would not want to surprise markets by changing the taper strategy, opposite to the statement that noted that they can adjust the strategy as needed.
Economic Data
The Institute for Supply Management’s services index advanced to 66.7 last month, exceeding all expectations, from 61.9 in September, data showed Wednesday.
Readings above 50 signal growth of economic activity. The gauges of new orders and business activity also increased to the highest in data back to 1997, indicating the economy picked up steam at the start of the fourth quarter.
The ISM’s measure of prices paid by service providers for materials and services increased to the highest level since September 2005.
Orders for goods produced by U.S. factories rose 0.2% in September according to a governmental announcement on Wednesday. Orders for durable goods slid 0.3%, but the decline was offset by a 0.8% increase in orders for nondurable goods.
U.S. manufacturers have plenty of demand, but they are encountering trouble finding enough labour and materials to keep production going smoothly. Automakers have been particularly hit the hardest. The shortages have slowed the U.S. economic recovery.
Other Developments
Powell’s conservative stance put some pressure on the dollar while providing a boost to Wall Street, with the three major indexes reaching record highs. US Treasury yields advanced, with the yield on the 10-year Treasury note settling at 1.60%.
The EUR/USD pair is still powerless and incapable to advance beyond 1.1615, while GBP/USD trades near 1.3700. The AUD/USD pair recovered towards 0.7450, but the risk is twisted to the downtrend amid an also dovish RBA. The USD/CAD pair fell below 1.2400, despite weaker oil prices.
WTI settled around $80.00, down after U. S. crude stocks rose by more than expected, while gasoline inventories hit a four-year low. Also, Iran nuclear talks are set to resume on November 29 in Vienna.
Gold plummeted ahead of the Fed’s decision, trimming part of their intraday losses ahead of the close. It finished the day at around $1,770.00 per ounce.
Also Read
USD and Gold Impacted by Taper Decision, Shares Only Gainers
Gold in negative territory after FOMC’s decision
Tarantino jumps into crypto market with auction
S&P 500 turns slightly higher after Fed statement
Powell’s Key Comments on Inflation, Employment Figures
Interest Rate Unchanged, Fed to Start Taper by $15 Billion
Wall Street mixed as focus shifts to taper decision
FOMC effects taper starting mid-November
Treasuries yields rise ahead of FOMC statement
FOMC to announce start of QE withdrawal
September U.S. factory orders increase 0.2% amid shortages
U.S. Services Gauge Progresses to Record High
