Dollar Drifts Lower Ahead of Fed Rate Decision

USD

The dollar index, which measures the greenback against a basket of major currencies, dropped to 97.60 as market participants await the Fed's meeting outcome. The recently released economic data suggested that the Federal Reserve should lower interest rates for the third time this year. Currently, the CME Fed Watch Tool is showing a probability of 96.2% that the Federal Reserve will cut its interest rate by 25 basis points to 1.50-75%. Since the market is already pricing in today's move, the focus shifts towards the Fed's next move. The US 10-year yields settled at 1.838%, the USDJPY remained flat near 108.85, while the EURUSD edged higher to $1.1123.

GBP

The British pound inched higher against rivals as the UK parliament approved a general election. Prime Minister Boris Johnson won the lower house approval on a general election to take place on December 12. Boris is seeking to win the majority, which would support him in ratifying the Brexit deal and put an end for the Brexit saga. However, the outcome of the election is unpredictable and could intensify the current uncertainty. The GBPUSD rallied higher to $1.2904, and the GBPJPY advanced to 140.52.

CAD

The Bank of Canada will hold its monetary policy meeting later today, where the market widely expects the committee to leave interest rates unchanged at 1.75%. The recently released economic data remained solid, giving the bank more time to assess the situation before easing monetary policy. The Canadian dollar gained ground against rivals in the past weeks supported by the divergence in monetary policy stance between the Bank of Canada and other major central banks.

Metals

Gold prices finished marginally lower ahead of the Fed's interest rate decision. Market participants are looking forward to the future path of interest rates to position themselves. The price of a gold ounce is trading slightly below $1490, the price of a silver ounce hovered near $17.80, while palladium retreated from an all-time high of $1810 to $1779.

Oil

Oil prices tumbled as Russia knocked expectations of OPEC+ supply cuts. The Russian Deputy Energy Minister stated that it is still too early to talk about deeper supply cuts. Oil prices found support last week on reports that OPEC+ could increase supply cuts to offset the slowing demand. On the other hand, the American Petroleum Institute reported that the weekly crude oil stock rose by 0.592 million barrels last week. The US Energy Information Administration will publish the official figures later on the day. The West Texas Intermediate crude futures declined to $54.57, and Brent futures dropped to $60.63.

Major Economic Events

Disclaimer 

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