Article by ForexTime

Federal Reserve Chair Janet Yellen, speaking in Washington DC on Wednesday, said that the US economy had recovered substantially and was set for further growth and firmer inflation. She also warned that there were risks in waiting too long to begin normalising policy. Her comments raised expectations that the Fed would raise interest rates this month. As a resulted, the dollar gained.

In other news, Australia’s trade deficit widened more sharply than expected in October, due to fewer exports. The deficit came in at A$3.3bn, compared to the A$2.6bn economists were expecting, according to the Australian Bureau of Statistics. The Aussie dropped against the greenback on the news before bouncing back up in reaction to data from China, which is Australia’s main trading partner.

The Caixin-sponsored composite PMI for November indicated growth for the first time in four months. The index came in at 50.5, the first time it had broken through the 50-mark separating contraction from expansion since July. It had hit a record low of 48 in September, and was 49.9 in October.

All eyes are no on the European Central Bank policy meeting later today. Investors are expecting the ECB will announce an extension of its €1.1trn quantitative easing package and possible cut to the benchmark deposit rate charged on lenders’ reserves from its current level of minus 0.2 per cent. These expectations of more stimulus have been weighing on the euro recently.

Article by ForexTime

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