Forex Today: The dollar wins again

What you need to take care of on Thursday, November 3:

The dollar finished Wednesday higher across the FX board following a volatile American session. The US Federal Reserve was behind the wild moves, as the central bank delivered as expected, but Chair Jerome Powell surprised with a hawkish speech.

The central bank pulled the trigger by 75 basis points, and the accompanying statement suggested policymakers would soon slow the pace of QT. “In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”  The greenback plummeted to fresh weekly lows against most major rivals as investors rushed to price in a 50 bps rate hike in December.

However, Chair Jerome Powell’s speech brought dollar buyers back to life. The head of the central bank noted that inflation needs to be taken down “decisively,” adding they are ready to change the monetary policy as needed. He mentioned that slowing the pace of rate hikes will become necessary at some point but also that it may take time for inflation to come down, and therefore, a restrictive policy stance should stay for some time. Finally, he added that the ultimate level of rates would be higher than previously expected. His words revived the odds of a fifth 75 bps in December. Stocks fell, yields surged, and the dollar soared.

Meanwhile, speculation that China could ease its zero-covid policy was erased after the country announced a new lockdown, this particular one, involving the area around the world’s largest iPhone factory, spurred concerns at the beginning of the day.

The EUR/USD pair trades in the 0.9820 price zone after posting a fresh weekly high of 0.9975.  GBP/USD plummeted below 1.1400, while AUD/USD trades around 0.6350. The USD/CAD pair is currently advancing above 1.3700.

The dollar also gained against safe-haven rivals. USD/CHF is above parity, while USD/JPY  trades around 147.80.

Gold advanced at the beginning of the day but finished it at around $1,636 a troy ounce.

According to preliminary EIA data, US imports of Saudi crude oil increased 208k bpd to 533k bpd for the week ending Oct. 28, according to preliminary EIA data, unexpectedly boosting oil prices. WTI eased at the end of the day amid plummeting equities but still closed in the green at $89.20 a barrel.  

The Bank of England is having a Super Thursday next.