The foreign exchange market is finally perked up in the pre-holiday for the United States. The release of weak data on retail sales, as well as the published minutes of the Fed meeting dated October 31-November 1, exerted local pressure on the US dollar rate.
In accordance with the published data, basic orders for durable goods in October significantly reduced the upward trend to 0.4% from 1.1% in September. The volume of orders for durable goods on a monthly basis showed a negative value of minus 1.2%, while in September there was an increase of 2.2%.
On this wave, the dollar's rate began to slide smoothly, as if unwilling, to decline, but then the pressure on it began to intensify, as market players switched their attention to the minutes of the last Fed meeting that was published in the evening. The market was interested in the opinion of the officials of the US central bank regarding the prospects for inflation. A comment made by the head of the Federal Reserve Janet Yellen should be noted. She expressed great concern that the level of consumer inflation remains below target, and, perhaps, it is a deeper issue that may cause low inflation in the future. After these words, investors were now interested in the opinion of other officials of the Fed, since Yellen herself is leaving the post of head of the central bank.
And the published minutes showed that there are similar concerns among some members of the Fed, which was the reason for selling in the dollar , as it is likely that majority of those in the market thought that after the current head of the central bank leaves, the current path of monetary policy could also change.
Today is a holiday in the U.S. and therefore a noticeably strong change in the markets is not expected. Perhaps the US dollar will still experience selling, but not as active. In our view, the topic of the minutes and the economic is already priced in and the dollar can even get support at the close of a number of short positions even by the end of the day.
Forecast of the day:
The EURUSD pair has sharply increased on the wave of growth expectations that the Fed will not dare to push through with the move to further raise interest rates in the 2018. Against this background, it can still grow to 1.1860, if it overcomes the level of 1.1835. But there is also a high probability that if this mark is not overcome, the pair can adjust to 1.1790 on a wave of profit-taking.
The USDJPY pair remains under strong pressure below the level of 111.65. It can be adjusted upwards to this mark due to the closure of some short positions against the background of a holiday in the States and local overselling.
