Forex Today: Dollar rises as markets await the Fed and employment data

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During the Asian session, New Zealand will release the employment report, and RBNZ Governor Orr will hold a press conference following the presentation of the Financial Stability Report. Australia’s data includes the AiG Index and Building Permits. Later in the day, the ADP Employment report and the ISM Manufacturing PMI are due. The key event will be the FOMC decision and Powell’s press conference.

Here is what you need to know on Wednesday, November 1:

The Federal Reserve (Fed) concludes its two-day meeting on Wednesday, with market expectations for the central bank to maintain its monetary policy stance. No surprises are expected, and if the Fed holds the same tone and message, it could be a non-event for markets. Analysts are looking for clues about how long the Fed will keep rates higher.

Before the FOMC statement, important economic data is due, including the ADP employment report, JOLTS, and the ISM Manufacturing PMI. More jobs data is due later in the week with the weekly Jobless Claims on Thursday and Nonfarm Payrolls on Friday.

Wall Street posted gains on Tuesday; however, the US Dollar strengthened amid higher Treasury yields. The Dow Jones gained 0.38%, and the Nasdaq climbed 0.48%. The 10-year Treasury yield rose to 4.90%. The US Dollar Index (DXY) rebounded and posted its highest close since October 4, above 106.60.

Data from the Eurozone showed that inflation slowed more than expected in October and that the economy contracted by 0.1% during the third quarter. These numbers will likely keep the European Central Bank (ECB) on hold. EUR/USD dropped from 1.068 to 1.0555. Despite the decline, the pair continues to make higher highs and higher lows, which is a positive sign for the Euro. However, it needs to break above 1.0700 to open the doors to more gains.

Analysts at Commerzbank on Euro area inflation:

Most members of the ECB’s Governing Council are likely to be pleased with the data. The ECB is unlikely to raise interest rates further. This is all the more true as the economy contracted slightly in the third quarter.

GBP/USD reached 1.2200 and then turned downward, remaining below the 20-day Simple Moving Average (SMA). It closed around 1.2150, moving sideways near monthly lows. EUR/GBP reversed after hitting the highest level since May at 0.8757 and dropped towards 0.8700.

The Japanese Yen was the worst performer on Tuesday after the Bank of Japan (BoJ) meeting. USD/JPY continued to rise even during the American session and posted at 151.60, the highest daily close since 1990.

The Swiss Franc also tumbled across the board on Tuesday, with USD/CHF rising almost a hundred pips, and EUR/CHF climbing above 0.9600, reaching the highest level since October 5.

AUD/USD continued to trade in a range around 0.6350, offering no clear signals. The improvement in market sentiment did not offset Dollar strength and kept the pair far from 0.6400 and closer to 0.6300. Australian data due on Wednesday includes the AiG Construction, Manufacturing, and Industry indexes, as well as Building Permits.

USD/CAD hit fresh one-year highs at 1.3891 and then pulled back to 1.3870. The pair maintains a bullish tone, facing resistance at 1.3900.

Gold and Silver tumbled ahead of the FOMC meeting. XAU/USD failed to hold above $2,000 and dropped to $1,980. Silver lost 2%, falling to $22.75.