Marketwatch North America

Daily Insights
November 2, 2023

The FOMC voted to leave the federal funds rate unchanged at 5.25%-5.50% at yesterday’s policy meeting. Key quotes from Fed Chairman Powell yesterday regarding the FOMC’s views on rates and efforts to reduce inflation:

  • Inflation has moderated since the middle of last year and readings over the summer were quite favorable
  • We remain committed to bringing inflation down to our 2% goal and to keeping longer term inflation expectations well anchored
  • Reducing inflation is likely to require a period of below potential growth and some softening of labor market conditions
  • The stance of policy is restrictive, meaning that tight policy is putting downward pressure on economic activity and inflation, and the full effects of our tightening have yet to be felt
  • Inflation has moderated since the middle of last year, and readings over the summer were quite favorable. But a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal
  • The process of getting inflation sustainably down to 2% has a long way to go

Traders interpreted Powell’s comments from yesterday as primarily dovish, a signal that the FOMC has paused its rate hike cycle. U.S. Treasury prices are higher in all tenors following the rate announcement with the biggest gains in the long-term dates, leading to a flatter yield curve. The 20-year rate today is 5.014% vs. 5.2865 on Oct 31st; and the 30-year rate is 4.83%, down from 5.0949% on Oct 31st.

Lower yields are pressuring the USD today which is down vs. all G10/major currencies: -1.01% vs. NZD, -0.95% vs. MXN, -0.85% vs. EUR, -0.80% vs. AUD, -0.54% vs. CAD, -0.52% vs. JPY. The U.S. Dollar Index is -0.88% and trading at 105.945.

U.S. Weekly Initial Jobless Claims for the week ending Oct 28th were 217k, 210k estimate. Tomorrow’s economic calendar includes the Change in Nonfarm Payrolls for October, a key reading on labor trends.

Economic Calendar

GBP - BOE Monetary Policy Report
AUD - Goods Trade Balance
GBP - Monetary Policy Summary
JPY - 10-y Bond Auction
GBP - MPC Official Bank Rate Votes
CHF - CPI m/m
GBP - Official Bank Rate
EUR - French Gov Budget Balance
GBP - BOE Gov Bailey Speaks
CHF - SECO Consumer Climate
USD - Unemployment Claims
EUR - Spanish Manufacturing PMI
EUR - Italian Manufacturing PMI
EUR - French Final Manufacturing PMI
EUR - German Final Manufacturing PMI
EUR - German Unemployment Change
EUR - Final Manufacturing PMI
EUR - Spanish 10-y Bond Auction
EUR - French 10-y Bond Auction
USD - Challenger Job Cuts y/y
USD - Prelim Nonfarm Productivity q/q
USD - Prelim Unit Labor Costs q/q
USD - Factory Orders m/m
USD - Natural Gas Storage
CHF - SNB Chairman Jordan Speaks

Market Indicators

Currency Pairs
Pair High Low
usd/jpy 150.592 149.941
eur/usd 1.06675 1.05837
gbp/usd 1.22251 1.21552
aud/usd 0.64559 0.64171
usd/cad 1.38518 1.37865
eur/gbp 0.87333 0.86893
usd/mxn 17.7875 17.5513
Equities and Commodities
S&P 500 4275.34
NASDAQ 14849.9
DOW 33479.7
GOLD 1987.4
SILVER 22.97

This document is for information purposes only and does not constitute any recommendation or solicitation to any person to enter into any transaction or adopt any trading strategy, nor does it constitute any prediction of likely future movements in exchange rates or prices or any representation that any such future movements will not exceed those shown on any illustration. All exchange rates and figures appearing are for illustrative purposes only. You are advised to make your own independent judgment with respect to any matter contained herein.