What happened across the Asia session?
The US dollar continues to make year-to-date highs amid market expectations of a faster pace in tapering, leading to a possible hike in the first half of 2022.
What does it mean for the Europe and US Sessions?
Even if the upcoming flash PMI from the Euro zone sparkles, the data set is unlikely to sway the ECB’s dovish stance.
Along with its European counterpart, the AUD is likely to see a further drive lower towards multi-month lows against the favourite, USD.
The Dollar Index (DXY) Update
Key news events today
No major news events.
What can we expect from DXY today?
The reappointment of Mr Powell as the Fed chair ensures policy continuity of a relatively more hawkish/ less dovish tone, compared to the contender Miss Brainard, who is seen to be more tilted towards the dovish end.
Central Bank Notes:
- Taper at the pre-set pace of US15 billion per month from mid-November
- Emphasised clear divide between tapering and rate lift-off
- Next meeting on 15 December 2021
Next 24 Hours Bias
Weak Bullish
Gold (XAU) Update
Key news events today
No major news events.
What can we expect from Gold today?
As expected, the precious metal fell on the back of a stronger US dollar, driven by the reappointment of US Fed chair Powell. Prospects of further lockdowns in Europe, that lowers expectations of a sustained global rise in prices, may drive Gold below the psychological support at $1,800.
Next 24 Hours Bias
Weak Bearish
The Euro (EUR)
Key news events today
German Flash Manufacturing PMI, 1630 GMT
German Flash Services PMI, 1630 GMT
What can we expect from EUR today?
ECB’s Villeroy and Knot reiterated the dovish stance of the central bank. The EUR/ USD pair should continue to mark new multi-month lows on the back of the central policy divergence with the Fed.
Central Bank Notes:
- Still see inflation declining in 2022 and staying below the 2% target in 2023
- Stated that conditions for a rate liftoff would not be satisfied in the near future
- Next meeting on 2 December 2021
Next 24 Hours Bias
Strong Bearish
The Swiss Franc (CHF)
Key news events today
The safe-haven asset is likely to continue to be in demand as the Covid situation in the European continent develops. News flow regarding possible lockdowns should spur the Swissy even higher.
What can we expect from CHF today?
Central Bank Notes:
- Reiterated pledge to intervene in FX market to counter upward pressure on CHF, which was classified as ‘highly valued’.
- Keeping a close eye on mortgage lending and residential property prices.
- Next meeting on 16 December 2021
Next 24 Hours Bias
Weak bullish
The Pound (GBP)
Key news events today
Flash Manufacturing PMI, 1730 GMT
Flash Services PMI, 1730 GMT
What can we expect from GBP today?
Better-than-expected flash PMIs due for release later today would give the BoE less room for not tightening monetary policies amid the highest inflation seen in decades. The manufacturing figure is expected at 57.2 (prev. 57.8) and the services number is anticipated at 58.6 (prev. 59.1)
Central Bank Notes:
- Perceived hawkishness in prior forward guidance turned to a dovish picture, with certainty for a rate hike in Q4 dropping significantly
- Mid-term inflation expectations are still well-anchored
- Next meeting on 16 December
Next 24 Hours Bias
Weak bullish
The Canadian Dollar (CAD)
Key news events today
No major news events.
What can we expect from CAD today?
The sluggishness in oil and its recent spill over effect on the loonie may come to a halt as OPEC+ has responded to the threat from large oil consuming nations. The cartel will reduce its planned increase in supply upon the release of strategic reserves by the latter group.
Central Bank Notes:
- Ended QE program and will only purchase to replace maturing bonds
- Sees conditions for a rate hike to be satisfied around March 2022
- Lowered projections for growth in 2021 and 2022; raised CPI forecasts for the same period
- Next meeting on 8 December 2021
Next 24 Hours Bias
Weak bullish
Oil
Key news events today
No major news events.
What can we expect from Oil today?
OPEC+ is likely to retaliate through a reduction in the planned increase of 400,000 barrels per day every month from August to April next year, in response to an anticipated co-ordinated release of strategic reserves from large oil consuming countries.
OPEC+ Notes:
- The cartel agreed on a roadmap in July to gradually raise its collective output quota by 400,000 barrels per day every month from August to April next year.
- Cuts 2021 demand forecast by 160k bpd; keeps 2022 figure at 4.2m bpd
- Next meeting on 2 December
Next 24 Hours Bias
Weak bullish
