Forex news for North American trade on November 3, 2021:
- Federal Reserve begins taper at $15B/month pace, as expected
- Powell opening statement: We remain attentive to risks
- Powell Q&A: We think we can be patient
- Comparing September with October FOMC statements
- The full FOMC statement
- October ISM services index 66.7 vs 62.0 expected
- ADP October US employment 571K versus 400K estimate
- Weekly crude oil inventories 3.291M vs 2.225M estimate
- US September factory orders +0.2% versus -0.1% estimate
- ECB Villeroy: There is no reason for the ECB to raise rates next year
Markets:
- Gold down $13 to $1774
- US 10-year yields up 2.8 bps to 1.57%
- S&P 500 up 30 points to 4660
- WTI crude down $3.81 to $80.10
- NZD leads, JPY lags
There were no surprises in the Fed's taper plan as they delivered the $15B they outlined in the FOMC minutes. On the hawkish side, they gave themselves room to maneuver from the $15B pace but on the dovish side, they kept transitory language. In the press conference, Powell said they can be patient in waiting for bottlenecks to clear.
That final message tipped the market towards buying risk assets, which generally meant selling the US dollar. That makes sense.
EUR/USD rose to 1.1615 from 1.1580 while cable extended gains to 1.3985 from 1.3655. The commodity currencies added around a quarter cent against the dollar.
Overall those are small moves and that reflects a Fed that behaved largely as expected.
Oil was a sold ahead of the OPEC meeting. Perhaps that reflects nerves but it's also notable that Iran nuclear talks were scheduled. With the US so concerned about high oil prices, the idled Iranian capacity would be welcome to Biden's agenda. Despite that, the Canadian dollar largely ignored the 5% crude drop and focused on the Fed trade.
USD/JPY chopped from 113.80-114.20 on the Fed decision as dollar selling met risk-positive markets overall. The pair is on track to finish unchanged for the second day in a row.
