Market Drivers – US Session 25/11/2022

Mohamed Abdelhamid 26 November, 2022 3:19 am Forex Market, Market Update

The US dollar edges higher within range-bound holiday markets on Friday in an obviously quiet US trading session following the US Thanksgiving holiday. The American currency is near multi-month lows as the prospect of the Fed’s pace of policy tightening keeps impacting the dollar.

Today has all the indicators of another session dominated by US dollar consolidation. Liquidity is quite limited. The Euro slid 0.1% against the dollar to $1.04015 but remained not far from the four-month high of $1.0481 touched in earlier mid-November. For the week, the shared currency was up 0.7% against the dollar.

Economic Data

No major data was released in other markets on Friday during the US session.

Other Developments

The European Central Bank’s top economists are wrangling over the outlook for inflation and interest rates, leaving investors perplexed over the central bank’s next policy moves.

Philip Lane and Isabel Schnabel, who lead the economic debate on the ECB’s board, gave contrasting views this week on whether the Eurozone central bank should scale down its interest rate increases and even on how to measure inflation.

China’s central bank said on Friday it would cut the amount of cash that banks must hold as reserves for the second time this year, releasing about 500 billion yuan ($69.8 billion) in long-term liquidity to bolster the slowing economy.

The offshore Chinese yuan fell about 0.3% to 7.2071 to the dollar, headed for a second weekly loss, as COVID-19 worries continued to weigh.

Cryptocurrencies, which have come under intense selling following the high-profile collapse of crypto exchange FTX, remained choppy, with bitcoin down 0.6% at $16,485.

This week’s coronavirus crisis has impacted West Texas Intermediate crude oil price, on fluctuating expectations about potentially lower demand. Meanwhile, the Eurozone is threatening to impose a cap on Russian oil exports and the floating performance of the US Dollar, all these factors are keeping WTI in a remarkably defensive stance.

The US crude oil benchmark, remains moderately negative due to low demand concerns surrounding the crude oil market. Factors like ongoing China’s Covid-19 outbreak and reports emerging during the week for increased crude output keep the WTI price stable. At the time of writing, WTI crude trades around $77. Per barrel. It is trading now at $76.70.

Investors’ sentiment is mixed, partly because of the thin liquidity conditions amid a shortened week due to the US Thanksgiving holiday. Additionally, China is registering high number of Covid-19 cases would dent demand for the black gold, weighed on WTI price.

Gold is trading around $1751 per ounce at the time of writing versus the previous closing price; $1754.18 The US dollar’s weakness has helped gold price to test $1,780 per ounce. On the other hand, the Fed’s commitment to fight inflation with tighter monetary policy leaves space for future dollar’s gains.

Minutes from the Federal Reserve’s November meeting, released on Wednesday, showed that most policymakers at the central bank agreed it would soon be appropriate to slow the pace of interest rate hikes.

Powell’s Speech Awaited

On November 30, Federal Reserve Chair Jerome Powell will speak at the Hutchins Center on Fiscal and Monetary Policy on the outlook for the economy and the changing labor market. Powell’s first comments since the November 2 meeting will be crucial.

Also Read
US Stocks Face Mixed Sentiment, Still Boosted By FOMC Minutes