US Open Note – US dollar edges higher ahead of US data releases

Dollar hits fresh 16-month high

The US dollar resumed its rally today, reinforced by markets' expectation of an eventual Fed rate hike move by June 2022, and the weaknesses observed in most major currencies.  In addition, the dollar got an extra boost as the weekly jobless claims plunged to 199k, which is the lowest figure reported since 1969, providing optimistic signals about the labor market recovery. However, the slight retreat in short-dated Treasury yields has capped the greenback’s gains in the current session.

The British pound is flirting with a near two-year low today versus the dollar amid increasing Brexit woes. Furthermore, the euro is struggling as the ECB’s pushback against rate hikes in 2022 combined with the new round of COVID-19 restrictions  that are spreading among an increasing number of European countries, act as a headwind for the currency.

The kiwi slipped to a six-week low after the Reserve Bank of New Zealand's decision to increase interest rates by 25 basis points disappointed the markets, which had bet on a more aggressive 50 bps increase.

US stocks in the red 

Wall Street is set to open lower today as futures for the major indexes are trading lower in the current session. However, the outlook might change as investors will probably weigh the slew of economic data coming out later in the day.

In individual stock news, Elon Musk resumed selling his shares in Tesla, while he is currently more than halfway to making good on his promise to offload 10% of his stake.

Oil stabilizes, gold dips

Oil prices fell at the beginning of today’s session as investors questioned the effectiveness of the US-led initiative for the release of strategic oil reserves. However, oil prices have currently rebounded as markets shifted their focus on how the producer countries will respond to the US move. On the other hand, gold is trading lower today, pressured by the stronger dollar.

Main events coming up

There is a barrage of US data releases today ahead of the Thanksgiving holiday. The core PCE price index will be reported at 15:00 GMT, which will be closely monitored for further signs of price pressures following the 6.2% CPI reading. Moreover, the FOMC minutes at 19:00 will be in the spotlight as hints might emerge on whether the Fed will speed up both its tapering program and its interest rate hike timeline.

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