Dollar slightly higher ahead of the FOMC minutes

23 November, 2016

Wednesday started with a set of preliminary PMIs from Europe but equally interesting numbers will come in the afternoon: the first glimpse at investments in the US in Q4 (advance durable goods orders for October) and the full-sample reading of US consumer sentiment. Some releases from Thursday (Thanksgiving in the US) and Friday (shorter working day in the US) will also be posted today. And in the evening comes FOMC minutes - the market seems to know exactly what it will contain, and yet this may be an important trigger.

US FOMC minutes from the November meeting from before the US elections. It may explain that the reservations Fed had to directly pointing to December were linked to the election uncertainty. Recent rhetoric from Fed members left no doubts the rate will go up in December. But this all is already digested by the market. Still, the event may be quite important for USD and equity if investors find it a good excuse to take profit from the dollar rally and other big moves that started after the elections. 

The EMU numbers came a few minutes past 8:00 GMT. EURUSD ignored the French outcomes, and now seems to do the same after the stronger German services sector data despite no support from the US yields (which are more less flat today).  Stong services PMIs from France and Germany did not give the euro enough backing to dare to face USD morning surge. EURUSD tried to stabilize after the full Eurozone numbers came out but the pair seems to target hitting 1.06 nevertheless.

Oil prices have been fairly stable so far today following a recent rally and a volatile trading yesterday. Prices have been boosted by hopes for the OPEC deal at the summit that is exactly one week away but some doubts resurfaced yesterday again.

Restrictions introduced by the Chinese commodity exchanges had only a very short term cooling impact on prices of coking coal, iron ore and rebars. Following a small pullback these markets are exploding again and higher prices improve terms of trade for Australia. Little wonder that it has a positive impact on the AUD - the currency is coming back from a post-US elections slump.


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