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US stocks Rise and Dollar Tumbles on Powell's Interest Rate Comments

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Equities

Major US indices finished sharply higher for the third consecutive day, boosted by Fed's Powell comments on interest rates and hopes of a trade deal between China and the United States at the G20 summit. Powell said that interest rates are "just below" neutral level. His comments helped to ease woes of further monetary policy tightening and enhanced investors' risk appetite. On the other hand, investors await the outcome of the meeting between the US President Donald Trump and the Chinese President Xi Jinping that will take place at the G20 summit. Trump could be eager to reach a deal with China as he was worried that a long-term trade war could negatively affect the performance of the US economy. The Dow Jones Industrial Average futures climbed 2.3% to 25335, the S&P500 futures rose 2% to 2741, and the Nasdaq futures jumped 2.9% to 6916.

USD

The dollar index which measures the greenback against a basket of major currencies lost 0.5% to 96.83, weighed down by Powell's comments. During his earlier speeches, Powell used to say that interest rates are long from neutral which always supported the greenback. However, last night, he stated that interest rates are just below the neutral level which lowered the chances of hiking interest rates two times in 2019. Market participants await the minutes of the FOMC November 7-8 meeting for further hints about the interest rate path. The USDCAD fell from a five-month high of 1.3360, to settle 0.16% lower at 1.3274, and the EURUSD gained around 1% to 1.1395. The US 10-year Treasury yields dropped to a two-month low of 3.011%.

Metals

Metals prices advanced as the dollar and Treasury yield declined on Powell's comments. The gold ounce bounced off a two-week low of $1211 and climbed more than 1% to $1226, and the silver ounce added 1.5% to $14.35.

Oil

Oil prices closed lower as the US crude inventories jumped to their highest level in a year. The Energy Information Administration reported that the US crude inventories rose last week by 3.577 million barrels to a one-year high of 450 million barrels. The West Texas Intermediate crude futures lost 3.5% to $50.27, and the Brent futures dropped 3.5% to $58.70.

Major Economic Events

GMT Country Event Expectation Previous
13:30 US Core PCE Price Index (YoY) (Oct) 1.9% 2.0%
15:00 US Pending Home Sales (MoM) (Oct) 0.8% 0.5%
19:00 US FOMC Meeting Minutes     


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