The US dollar on Monday halted its rally on the wave of expectations of important events and publication of economic data.
The events can be attributed the results of the Fed meeting on monetary policy, which will be held tomorrow on Wednesday, as well as the appointment of a new head of the US Federal Reserve, which is expected to become known this Friday. And from these data, the figures for October employment will be an undoubted favorite, which will be released in two levels: first, on Wednesday, the report on the number of new jobs in the private sector from ADP will be published, and then on Friday the number of new jobs and the unemployment rate will be released.
The markets do not expect anything particular from the November meeting of the U.S. regulator. It is assumed that the rates and the level of reduction in the bank's balance sheet will remain unchanged, so investors' attention will be drawn to what it will say in its statement. Will there be a strong hint at the continuation of the cycle of raising interest rates? Which characteristics of the state of the country's economy will the regulator give on the wave of the latest good preliminary data on GDP for the third quarter.
In our opinion, the Fed will continue to look optimistically into the future, which will be a supporting factor for the dollar.
With regard to the new leader, we note that the appointment of any of the three favorites - J. Yellen, J. Powell and J. Taylor - will not change the current policy of normalizing monetary policy. It will persist even with the appointment of Powell, who is considered a monetary "dove" and an advocate of a softer approach in monetary policy. But at the same time we note that if the choice of D. Trump will be Taylor, then it will have a noticeable support for the dollar, since a tighter view of monetary policy is associated with it.
And the last development: the publication of employment data will be a strong positive for the US currency. It is assumed that the data from ADP will show an increase in the number of new jobs in the private sector at 200,000, and official figures from the Ministry of Labor will show an increase in new jobs in the non-agricultural sector at 314,000 and an unemployment rate at 4.2%. Such strong values of indicators will also provide support for the dollar. Therefore, we expect it to strengthen in the market.
Forecast of the day:
The EURUSD pair is trading above the level of 1.1580, but if the data on inflation in the euro area shows a decline, then the pair is likely to resume falling to 1.1550 with the prospect of a decline to 1.1485.
The EUR GBP pair may fall to 0.8750-55 after breaking through 0.8795 if news on inflation from the eurozone is negative, while the pair will be under pressure due to rising expectations of higher rates by the Bank of England this Thursday.
