Breaking News
Investing Pro 0
Cyber Monday SALE: Up to 54% OFF InvestingPro+ CLAIM OFFER

U.S. Dollar Slides, Wall Street Rises After Fed Minutes

By XM Group (Trading Point )Market OverviewNov 24, 2022 05:38AM ET
www.investing.com/analysis/dollar-slides-and-wall-street-rises-after-fed-minutes-200632752
U.S. Dollar Slides, Wall Street Rises After Fed Minutes
By XM Group (Trading Point )   |  Nov 24, 2022 05:38AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
LCO
+2.21%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
  • Fed minutes show that officials agreed on slower rate hikes
  • Dollar extends slide against all other major currencies
  • Wall Street adds to gains ahead of Thanksgiving
  • Oil prices slip on price cap talks

Dollar slides as Fed minutes reveal concerns about overshooting

The US dollar extended its slide yesterday and kept drifting south during the Asian session today, with investors liquidating more of their long positions after the Fed released the minutes of its latest gathering.

The minutes revealed that policymakers largely agreed that smaller rate increases may be warranted henceforth as the economy adjusted to more expensive credit. However, what may have constituted a more important piece of information were the increasing concerns about overshooting. Participants emphasized that the terminal interest rate level and the evolution of monetary policy thereafter had become more important considerations than the pace.

With Fed Chair Powell noting at the press conference that it is very premature to be thinking about pausing, the aforementioned revelation suggests that not all members are holding a view as hawkish as their Chief. What’s more, the fact that the discussion took place prior to data revealing a larger-than-expected slowdown in inflation may have added some credence to market participants’ bets of nearly two quarter-point rate cuts by the end of 2023, despite several policymakers pushing back against an imminent pivot, even in the aftermath of the inflation data.

The greenback may continue to fall for a while longer, especially with the S&P Global PMIs sliding further below the boom-or-bust zone of 50 and marking the fifth straight month of contraction. Nonetheless, the prospect of a full-scale bearish reversal likely remains premature. A more determining event on whether the correction is over, or a bearish reversal looms, may be the December FOMC gathering; not the rate decision per se, but the accompanying language, as well as the Committee’s updated economic projections.

Wall Street trades in the green ahead of Thanksgiving
Stock investors cheered the outcome of the minutes, with all three of Wall Street’s main indices closing the day before Thanksgiving in the green. The rate-sensitive Nasdaq gained the most, adding 1% to Tuesday’s rebound on hopes that interest rates will not weigh on valuations as much as was expected a month ago.

Yet, a bullish reversal in stocks is also off the cards for now. While investors pay more attention to the slowdown signals by the Fed, other major central banks have already eased their tightening efforts, with the relative comparison keeping the Fed among the most hawkish Banks. Adding to that, although weak US data enhance the notion of a slower rate path hereafter, a damaged economy is far from a positive development for the stock market. Thus, in case the outlook deteriorates further, the market impact of weak data on equities may well change.

Wall Street will stay closed today due to the Thanksgiving holiday.

Oil prices slide more than 4% as G7 nations consider price cap
Oil prices came under renewed selling pressure yesterday, despite the improvement in the broader market sentiment after the FOMC meeting minutes. Investors of the black gold placed more emphasis on reports saying that the Group of Seven (G7) nations considered imposing a price cap on Russian oil above current levels, while US data showed a larger-than-expected build in gasoline inventories. Both Brent and WTI crude prices fell more than 4%, getting again closer to their September lows of $82.50 and $76.00, respectively. WTI broke briefly lower, and Brent touched its September low on Monday, but they were both quick to recover.

The news comes on top of worries about demand, especially from China, the world’s second largest economy and top oil importer, where a resurgence of COVID cases led to more restrictive measures. The willingness of China’s cabinet to cut banks’ reserve requirement ratio (RRR) may delay a clear break below the aforementioned key support zones, but with hopes for a reopening from COVID lockdowns vanishing, a case where the economy gets out of the woods soon remains unlikely. Therefore, it may be a matter of time before we see oil prices extending their slide beyond their September lows.

U.S. Dollar Slides, Wall Street Rises After Fed Minutes
 

Related Articles

U.S. Dollar Slides, Wall Street Rises After Fed Minutes

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email