U.S. Dollar in familiar ranges, Aussie down post-RBA

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U.S. Dollar in familiar ranges, Aussie down post-RBA

NOVEMBER 02, 2021

The U.S. Dollar is being pulled in different directions, primarily seeing movement against the Oceanic currencies of New Zealand and Australia as global equities cool off a bit.

Overview

Today will be a day of markets mostly looking ahead to tomorrow as all eyes will be on the Fed’s policy decision announcement. It is highly anticipated that the Fed officials will agree to begin tapering its rounds of quantitative easing. Inflationary concerns are worrying some across markets who believe the pace of economic growth could be impacted. Additionally, the big-spending bill in Congress continues to run into key opposition, further delaying an economic victory for President Joe Biden.

Today’s narrative across news articles on the market is certainly sour as some wonder if the record S&P valuations will be hit by major pullback. Trying to predict the market sinking seems like a sign of turbulence and fear, which perhaps can be eased if things go right in November as the COVID threat dissipates.

What to Watch Today…

  • No major economic events scheduled for today

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EUR

The Euro recovered some points overnight with faith growing in the European Central Bank’s handling of monetary policy. European stocks also hit their best levels on record as the continent climbs out of the pandemic hole. Now with the PEPP (Pandemic Emergency Purchasing Programme) mostly done with, we shall see Euro improve as long as economic indicators do not take a dive and start contracting.

AUD

The Australian Dollar fell the most of any currency as market interpretation is that the Reserve Bank of Australia will be hesitant in hiking interest rates soon. As much as the situation has improved and shipping is returning to some normalcy, the economic reality is not convincing the RBA to make tightening moves that increase borrowing costs.

This mindset is supposedly not what is to be expected out of the ECB, BOE, or Fed, but we would not be shocked if there is some delay to much of the tightening expectations a lot of traders have. It may come slower than forecast.

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