Markets are jittery, moving around with little consistency or direction ahead of today’s FOMC meeting. Traders will be looking for three pieces of information: 1) details on the tapering of the $120 billion per month bond purchase program; 2) comments that may describe how fast the tapering process will take place, and 3) comments about the Fed’s belief that inflation is ‘transitory’. Global equities are mixed, the S&P 500 is opening a bit lower. Global bond yields are also lower as is the US dollar. The Bank of England meets tomorrow.
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November 3, 2021
EUR/USD 1.1573 GBP/USD 1.3646 USD/CAD 1.2434 AUD/USD 0.7432 USD/JPY 113.95 USD/CNH 6.4025 USD/ILS 3.1333 USD/MXN 20.8685 USD/CHF 0.9129 USD/INR 74.4563 USD/BRL 5.6929 USD/SGD 1.3508 USD/DKK 6.4279 USD/SEK 8.5689 USD/NOK 8.5224
The dollar is slightly lower ahead of today’s FOMC meeting. The S&P 500 opens lower after reaching a record high yesterday. The US Treasury 10Yr yield is lower by 1 bp to 1.54%. The Republican victory in the closely followed governor’s race in Virginia is having no immediate reaction in the markets.GBP
The 3-week decline in GBP stopped today, as least temporarily, ahead of today’s Fed meeting and tomorrow’s Bank of England meeting. Traders are expecting a 15 bp hike in the BoE’s benchmark lending rate. Uncertainty is extraordinarily high with near-term GBP/USD option pricing soaring to six-month highs.EURThe euro is flat overnight despite a slew of economic releases in the eurozone. EZ Unemployment data was a little better than expected and industrial output surprised on the upside. ECB member Madis Muller said it’s too early to gauge if inflation drivers in Europe are temporary.CAD
The Canadian dollar is slightly weaker ahead of the FOMC meeting, as commodity prices are soft. Interest rate differentials between US and Canadian debt continue to widen in favor of Canada as the BoC is moving more quickly than the Fed is unwinding extraordinary stimulus measures.ASIA/PACIFIC
The New Zealand dollar was the best performing currency overnight following upbeat jobs data and positive comments from the Reserve Bank in its semi-annual Financial Stability Report.
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