Forexlive Americas FX news wrap 20 Nov: Fed’s Bowman more hawkish. 20 year auction ugly.

• Fed’s Collins looks to be on the fence re a December interest rate cut
• Late day rally pushes Dow and S&P up. Nasdaq lower but well off lows
• ECBs Stournaras: ECB policy has tamed inflation
• Crude oil futures settled at $68.87
• US treasury sells $16 million of 20 year bond the high yield of 4.680%
• More from Bowman:It’s concerning we’re recalibrating policy w/out reaching inflation goal
• Fed’s Bowman: Fed may be closer to neutral policy then policymakers currently think
• More from BOE’s Ransden: October CPI data only marginally above BOE’s forecast
• More from Cook:Productivity is such a long run stable trend that exceeding it is very hard
• European indices close lower
• BOE Ramsden: Recent trends toward loan relatively stable inflation should continue
• Fed’s Cook: If inflation progress slows w/ jobs still solid, could see pause
• Weekly oil inventory data from the EIA is due soon. The private survey showed a huge build
• Bitcoin trades to another new record high at $94,852
• Tech sector shifts: Investor focus on software innovation and defensive plays
• US Commerce award $1.5B to GlobalFoundries as part of the Chips Act
• What technical levels are in play for some of the major currencies vs the USD
• ForexLive European FX news wrap: Dollar starts to perk up again
• US MBA mortgage applications w.e. 15 November +1.7% vs +0.5% prior

Markets:

• Gold up $16.73 or 0.63% had $2648.75
• US 10-year yield 4.415%, +3.7 basis points
• US 2-year yield 4.320%, +4.9 basis points
• WTI crude oil down nine cents at $69.08
• S&P 500 unchanged
• NASDAQ fell -0.11%
• Russell 2000 unchanged
• Dow up 0.32%

The US dollar moved back higher after a few days of declines. The dollar index (DXY) rose 0.46%

• EUR, +0.52%
• JPY +0.53%
• GBP, +0.28%
• CHF +0.25%
• CAD +0.18%
• AUD +0.44%
• NZ +0.66%D

The economic calendar was void of any economic releases today. However, there was two Fed Governors who spoke. FIrst Feds Lisa Cook spoke and was ambidextrous in her economic and policy views. She said:

Fed’s Cook highlighted that the U.S. economy is in a strong position, with robust growth, a largely normalized labor market, and signs of continued disinflation. While core inflation remains somewhat elevated, housing services are the primary driver of this excess. Cook noted that recent wage growth moderation boosts confidence in further disinflation, though inflation progress may slow, potentially warranting a pause in rate adjustments. She emphasized that past rate cuts were significant in removing policy restrictions, with future adjustments depending on data, outlook, and risk balance, which she described as roughly even. Cook also pointed to the potential for underestimated productivity gains, particularly from AI, suggesting the economy’s underlying potential could be higher than expected. She acknowledged diminishing downside risks to jobs and reaffirmed that labor market weakness in recent data reflects temporary factors like strikes and storms. Looking ahead, she indicated that continued growth with easing inflation may justify further reductions in policy rates toward neutral, though elevated inflation suggests the Fed’s work is not yet complete.

Later Fed’s Michelle Bowman also spoke, but her comments were more hawkish:

Bowman emphasized the need for a cautious and flexible approach to monetary policy, noting that the central bank may already be closer to a neutral policy rate than many policymakers believe. She highlighted that her estimate of the neutral rate is significantly higher than pre-COVID levels and supported the November Fed rate cut as a gradual move toward easing. Bowman expressed concerns about recalibrating policy without fully achieving inflation goals, noting that progress in lowering inflation appears to have stalled, with elevated inflation and strong demand for affordable housing contributing to persistent price pressures. While the economy remains strong and the labor market is near full employment, Bowman acknowledged potential risks to price stability and noted that unemployment is below her estimate of full employment, with weaker hiring contributing to its recent rise. She also emphasized the importance of patient, cautious adjustments and policies that support workforce mobility, particularly citing challenges in labor availability, including those faced by her own farming family. Lastly, Bowman reiterated that Congress would need to mandate any central bank digital currency if deemed necessary

The US treasury auctioned $16 billion of 20 year bonds and the usual 1 PM, and investors did not show up. The auction high yield came in 3.0 basis points above the WI level at the time of the auction. The Bid to cover was below the six-month average and the dealers were saddled with a whooping 22.6% of the auction versus the six-month average of 11.2%. UGLY.

Yields moved higher today help by a comments mostly from Bowman along with the poor auction results. A snapshot of the market shows:

• 2-year yield 4.305%, +3.4 basis points
• 5- year yield 4.273%, +2.5 basis points
• 10 year yield 4.406%, +2.7 basis points
• 30 year yield 4.591%, +2.6 basis points

In Europe, ECB’s Stournaras stated that the ECB’s monetary policy has successfully tamed inflation and expects it to converge to the 2% target by early 2025. He emphasized the need for the ECB to avoid an inflation undershoot as conditions evolve. Stournaras noted that interest rates are likely to remain restrictive for an extended period, but sees given persistent downside risks to Eurozone growth (so why keep rates restrictive?).

Technically speaking:

EURUSD: The EURUSD started the day with a modest extension higher that took the price to the high of a swing area target at 1.06097. The price also got closer to its falling 200-hour moving average. That moving average currently comes in 1.05958. The subsequent fall to the price below its 100 hour moving average at 1.05617. A correction after the break tried to extend back above that moving average level, but quickly reversed. That push the pair back down toward the low from last Friday’s trade at 1.04956. The low price reach 1.0506 which was good enough for a new low for the day and week, but momentum cannot be sustained in the price bounced back higher into the close. The current price is trading at 1.0534. That is below the 100-hour moving average of 1.05617, but above the low price from last Friday and lowest level for the year (going back to October 2023).

USDJPY: The USDJPY higher in the Asian session and in the process extended above its 100 hour moving average currently at 155.00. The high price extended to 155.88 before rotating back to the downside and to the 100 hour moving average. Support buyers leaned against that level and pushed the price modestly off of the key moving average level at 155.40 currently. Going in the new day, the 100 hour moving average will be a key barometer. Stay above that level (at 155.00) and the buyers are in control. Move below and then below the 200 hour moving average of 154.697, and the sellers take more control in the short term.

GBPUSD: The GBPUSD moved higher earlier in the day and tested the high price from last Friday’s trade near 1.2719. The high price today reached 1.2714 and found one sellers. The subsequent fall took the price below its 100 hour moving average of 1.2657 where the price has remained into the close. That moving average will be the short-term bias defining level for both the buyers and sellers. Stay below is more bearish. Move above is more bullish at least in the short term. On the downside, the low price yesterday stalled near 1.2612. The low price from last Friday reached 1.2596. Move below those levels opens the door for further selling.

AUDUSD The AUDUSD moved higher in the early Asian session and in the process extended above its falling 200 hour moving average:. However, momentum could not be sustained the price spent the US session moving down to a new wall at and technical target at its 100 hour moving average. Support buyers leaned against the level and bounced modestly into the end of day. The 100 hour moving average comes in at 0.6488. Moving below that level and staying below that level in the new trading day would be more bearish. Conversely, staying above and extending above the falling 200 hour moving average (currently at 0.65124) would give the buyers some added confidence.

Good fortune with your trading.

This article was written by Greg Michalowski at www.forexlive.com.