Dollar yet under pressure ahead of FOMC Minutes

Daily Update - 22nd November 2017

Yesterday’s Market

• AUD RBA Meeting Minutes & Gov. Philip Lowe Speech
• GBP Inflation Report Hearing & Public-Sector Net Borrowing
• USD FED Yellen Speech

Yesterday Explained

Aussie dollar plummeted again on the back of weak meeting minutes from RBA. RBA Governor Philip Lowe also sounded dovish in return hurting Aussie Dollar further. UK Public-Sector Net Borrowing figures were a sur plus and that was positive for the GBP while favorable for the UK economy amidst Brexit crisis.

Yesterday, Federal Reserve chairwoman Janet Yellen announced her resignation as a member of The Federal Reserve board of governors where she took part in a panel discussion at the Stern School of Business in New York University. She raised doubts over weak US inflation and this dovish tone did not support the Dollar.

Also, a fresh WSJ report cited that Robert Mueller's investigators probed Kushner’s interactions with foreign leaders, extended the US political saga, weighing down on Treasury yields and the Greenback. Due to political uncertainty in Germany, as well as hopes for progress in the Brexit process and market anticipation for the upcoming UK Autumn Budget, the Euro and Pound has shed much of its recent gains.

Today’s Market

• EUR Non-Monetary Policy’s ECB Meeting
• GBP Autumn Forecast Statement
• USD Initial Jobless Claims, Durable Goods Orders & FOMC Minutes

Today’s Focus

Busy day before Thanks Giving Holiday. Early morning, we will have the ECB Non-Monetary Policy’s meeting minutes. Then UK will release Autumn Forecast Statement which provides an update on the economic outlook and a preview of the government’s budget for the coming year. Potential new fiscal policy announcements in this statement could drive Pound movement in the coming days.

Euro investors, on the other hand, are likely to keep a close eye on the political situation in Germany. Any developments suggesting that a government could still be formed about Chancellor Angela Merkel would make the Euro more appealing again. On the other hand, signs that a new election could be called would lead to a Euro plummet.

The latter half of the day belongs to USA. With several reports such as Initial Jobless Claims and Durable Goods being released. While the Fed hinted that they are on course to raise rates in December, they changed their wording about inflation, describing it as “soft”. We will now get an insight into the discussion among the members about inflation and job growth. It is unlikely that the minutes will change expectations about the December meeting, but the dollar will likely move.