The US dollar is relatively subdued ahead of a number of important publications, from US GDP data to the FOMC meeting minutes.
The US dollar index (DXY) was stable at around 96.50s in trading this Wednesday (24/November), still supported by the euphoria of welcoming Jerome Powell's nomination to become Fed Chair again.
On the other hand, market movements are relatively calm ahead of a number of important publications from Uncle Sam's country over the next few hours.
Traders' bets for the Fed's rate hike in 2022 are increasing, due to the shine of US economic data compared to a number of other developed countries.
Expectations of a Fed rate hike were also supported by US President Joe Biden's move to nominate Jerome Powell to serve as Fed Chair again.
Analysts from ING noted, "(Powell's nomination) resulted in a fresh round of USD buying, as the risk of the more dovish Lael Brainard taking over (despite Brainard being appointed Vice Chair) and markets strengthening their view of the Fed's first rate hike around mid-2022."
US bond yields also warmly welcomed Powell's nomination. The 10Y bond yield had increased to a one-month high of 1.68%.
The market's next attention will turn to the congested schedule of important data releases over the next few hours.
Starting from the release of Durable Goods Order data for October 2021, US Gross Domestic Product (GDP) data for the third quarter of 2021, weekly jobless claims, UoM consumer sentiment, PCE price index, and the minutes of the November 2021 FOMC meeting.
FOMC meeting minutes and PCE data are the two main focuses. The results of the FOMC meeting earlier this month marked the start of tapering, aka gradual cuts to the bond purchase program that has been going on since the beginning of the COVID-19 pandemic.
Market participants will find out if the minutes and PCE data open the possibility for an acceleration of the tapering rate.
If the tapering rate can be accelerated, the projection of the Fed's rate hike will also be faster.
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