Fed Sees Uncertain Rate Path, Focus Turns to G20 Summit

Fed Minutes Paint the Same Picture as Powell Did

After suffering massive losses on Wednesday, the dollar managed to recover against some of the other G10 currencies on Thursday, but not all. It staged a decent rebound against SEK, GBP and CHF in that order, while it stayed on the back foot against NOK, EUR and AUD. The greenback ended within a ±0.10 range against JPY and NZD.

USD/CHF — Technical Outlook

On the 18thof November, USD/CHF had entered a range between the 0.9920 and 1.0005 levels, indicating that the pair is on hold for now until the next market-driven event. The only thing that supports the downside a bit more, is the fact that, since the reversal south on the 13thof November, USD/CHF is forming lower highs. Nevertheless, the pair is struggling to make lower lows, hence we will remain neutral for now and wait for a confirmation break through one of the sides of the aforementioned range.

Investors Lock Gaze on G20 Summit

We think that the minutes and the slide in the yearly core PCE rate would have kept the dollar under strong selling interest under other circumstances, but the currency may have stayed somewhat offered due to its safe-haven status. Perhaps investors have started turning their gaze to the G20 summit in Buenos Aires, Argentina, where US President Donald Trump is expected to meet his Chinese counterpart on Saturday in order to discuss trade. Market participants will be eager to see whether the two leaders are willing to work in finding common ground over trade, or the dispute between the two nations will escalate further.

AUD/JPY — Technical Outlook

AUD/JPY blew up to the upside on the 28thof October and broke its short-term downside resistance line drawn from the high of the 8thof November. After that, the pair enters a very narrow range, which could get broken either way. But given the fact that AUD/JPY looks slightly overextended to the upside, there is a possibility of seeing a bit of retracement lower, to test the above-mentioned downside line from above and then try to bounce back up, where it could aim for recent and new highs.

As for the Rest of Today’s Events

During the European morning, Eurozone’s preliminary CPIs for November are coming out. The headline rate is expected to have ticked down to +2.1% yoy from 2.2% yoy in October, while the core one is anticipated to have remained unchanged at +1.1% yoy. That said, Germany’s headline inflation slowed by more than expected yesterday, suggesting that this could be the case with Eurozone’s headline print as well. However, even if the headline rate declines a tick below the forecast, it would still be near the ECB’s objective of “below, but close to 2%”. We believe that the core rate is likely to attract more attention. Coming on top of the softness in recent economic data, like GDP and PMIs, an underlying inflation rate of +1.1% yoy could slightly increase concerns over the bloc’s economic and inflation outlooks. Eurozone’s unemployment rate and Germany’s retail sales, both for October, are due out as well.

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