November 24, 2021
USD/JPY: The US dollar kept rising against the Japanese yen on Tuesday, a second trading session in a row, after Federal Reserve Chair Jerome Powell was picked for a second term. Thus, the greenback showed growth to its highest in four and a half years due to market expectations for US interest rates to diverge from those in Japan. As for macroeconomic data, US figures were mixed. The Manufacturing Purchasing Managers Index rose more than expected, while the Services PMI suddenly fell to 57. The Richmond Fed’s monthly manufacturing index declined to a reading of 11 in November from 12 in October, better than the expected value of 5. Today, we expect a busy macroeconomic calendar ahead of the US Thanksgiving Day on Thursday. The country will publish October Durable Goods Orders, the second estimate of the third quarter Gross Domestic Product, the latest FOMC Meeting Minutes and October core PCE inflation. It’s important to know that PCE inflation data is the US Federal Reserve’s favorite measure of prices pressure.
NZD/USD: The New Zealand dollar fell against the US dollar yesterday, and it was under pressure at the beginning of today’s trading session when the Reserve Bank of New Zealand published its interest rate decision. The New Zealand central bank didn’t surprise markets while announcing a widely anticipated 25 basis points of a rate hike to 0.75%. Officials expect the country’s inflation above 5% in the near term. The Monetary Policy Statement also said that it would be expedient to continue reducing stimulus. The local support level can be seen at 0.6900. A breakout below could take the pair to an immediate target of 0.6850.
Nasdaq100: The Nasdaq index fell a second trading session on Tuesday due to rising Treasury yields that motivated investors to sell Tesla, Microsoft and other Big Tech companies. Expectations about a possible rise of interest rates in the US earlier than expected are not positive for the stock market except bank stocks, particularly tech companies, which trade on very high price/earnings multiples. Market members are now pricing almost three hikes into 2022. Nevertheless, correction in the bullish market will be over when all expectations about rates are taken into account.