Pressured by the disappointing macroeconomic data releases and the dovish tone seen in the FOMC Minutes, the US Dollar suffered heavy losses against its rivals with the US Dollar Index (DXY losing nearly 1% on Wednesday. The DXY stays on the back foot early Thursday and continues to edge lower despite thin holiday trading. Bond and stock markets in the US will be closed in observance of the Thanksgiving Day holiday. The European economic docket will feature IFO sentiment surveys and the European Central Bank will publish the Monetary Policy Meeting Accounts.
The data published by S&P Global revealed on Wednesday that the business activity in the US private sector contracted sharply in November. Commenting on the data, “business conditions across the US worsened in November,” noted Chris Williamson, Chief Business Economist. “According to the preliminary PMI survey findings, with output and demand falling at increased rates, consistent with the economy contracting at an annualised rate of 1%.”
The US Dollar selloff that was triggered by gloomy PMI surveys intensified later in the day after the minutes of the US Federal Reserve’s latest policy meeting revealed that most policymakers backed slowing the pace of rate increases soon. According to the CME Group FedWatch Tool, the probability of a 50 basis points Fed rate hike in December currently stands at 76%. The 10-year US Treasury bond yield fell nearly 2% and closed the day below 3.7%. Meanwhile, Wall Street’s main indexes closed higher, reflecting the positive impact of the Fed’s publication on risk sentiment.
EUR/USD capitalized on the broad-based selling pressure surrounding the US Dollar and climbed to a fresh weekly high above 1.0400. The pair continues to edge higher toward 1.0450 early Thursday.
GBP/USD gained nearly 200 pips on Wednesday and broke above 1.2000. The pair was last seen trading at its highest level since mid-August near 1.2100.
USD/JPY fell sharply for the second straight day on Wednesday and erased all of its weekly gains. The pair continues to push lower early Thursday and fluctuates below 139.00.
Gold price took advantage of falling US Treasury bond yields and closed above $1,750 on Wednesday. XAU/USD edges higher toward $1,760 in the European morning.
The risk-positive market environment helped Bitcoin find demand and BTC/USD was last seen gaining nearly 1% on the day at around $16,700. Similarly, Ethereum is up already more than 2% on the day at $1,200 after having gained 4% on Wednesday.