Forexlive Americas FX news wrap: Powell says no “need to be in a hurry to lower rates”

• Fed’s Powell: Economy isn’t sending signals that we need to be in a hurry to cut
• Powell Q&A: We’re not thinking about political parties when we make decisions
• US weekly initial jobless claims 221K vs 223K expected
• US October producer price index +2.4% y/y vs +2.3% expected
• EIA weekly nat gas inventories +42 bcf vs +44 bcf expected
• ECB’s Schnabel: Asset purchases are more powerful for stabilizing markets than econ
• Bank of England’s Bailey: The UK must preserve free trade
• Fed’s Barkin: Fed is making great progress but needs to keep it going
• Trump transition palns to kill $7500 consumer tax credit for electric vehicles — report
• EIA weekly crude oil inventories +2089K vs +750K expected
• US Treasury:No manipulation of currency to gain trade advantage,but China needs monitoring
• Fed’s Kugler welcomes easing in inflation expectations
• BOE’s Mann argues for holding rates firmly until more evidence of diminished inflation
• ECB accounts: It is still too early to declare victory in the fight against inflation

Markets:

• Gold down $9 to $2564
• US 10-year yields flat at 4.45%
• WTI crude oil up 21-cents to $68.62
• S&P 500 down 0.6%
• USD leads, NZD lags

Several post-election themes ebbed today but not US dollar strength. The dollar had been trending lower in US trade until Powell changed his tone and delivered a speech saying:

“The
economy is not sending any signals that we need to be in a hurry to
lower rates. The strength we are currently seeing in the economy gives
us the ability to approach our decisions carefully.”

That knocked December rate cut odds down to 60% from 85% at the start of the week and that was no-doubt the aim. It comes after other Fed officials this week highlighted upbeat US growth and the potential for sticky inflation.

USD/JPY touched as high as 156.42 as it continues to cruise while the euro briefly fell below 1.05 in early European trade before bouncing 80 pips and then sliding to 1.0522 after Powell.

Commodity currencies were sold throughout the day and USD/CAD broke 1.40 for the first time since 2020. AUD and NZD both finished the day near the lows as equity markets sold off late and the US dollar climbed. On Friday we get the latest retail sales report and that should keep markets moving.

This article was written by Adam Button at www.forexlive.com.