Forex Today: Post-election USD weakness persists, focus shifts to BoE rate call
Here is what you need to know on Thursday, November 5:
On Thursday, November 5, the US Dollar (USD) continued to weaken following the midterm election results, with the USD Index sliding toward 101.00 in early European trading hours. The Bank of England (BoE) is set to release its monetary policy decisions and Bank of England Governor Andrew Bailey will speak on the outlook at 12:30 GMT.
The USD weakened against major currencies midweek as Democrats took control of both the Senate and the House. Crude Oil prices fell sharply due to renewed optimism about a de-escalation in the Middle East conflict, and Wall Street's main indexes experienced a risk rally following their opening bell. ADP reported that private sector employment rose by 86K in October, exceeding expectations, while the Institute for Supply Management's (ISM) Services Purchasing Managers Index (PMI) came in at 54.5, indicating healthy expansion in the service sector's economic activity.
The US Dollar was the weakest against the Swiss Franc. Analysts at Scotiabank attribute the recent G10 Dollar weakness to a "relief rally" following political and market developments, suggesting the USD is moving toward the middle of its "smile," where relative growth and interest rate differentials narrow. GBP/USD gained nearly 0.4% on Wednesday, touching its highest level since mid-September at around 1.3500, and remains in a consolidation phase at approximately 1.3480 in the European morning.
The Bank of England is expected to raise interest rates by 25 basis points to 4% during its decision. Societe Generale's Kit Juckes warns that Sterling's recent strength may be short-lived if the BoE appears hesitant about further rate hikes. Gold (XAU/USD) saw a positive reaction to the election outcome on Wednesday, gaining over 3% and trading above $4,100 on Thursday.
EUR/USD benefitted from the overall USD weakness and traded above 1.1250 on Thursday. The European economic calendar will include September Producer Price Index data and a discussion by European Central Bank President Christine Lagarde at the "New Dialogues for the Future" event in Milan, Italy. USD/JPY slightly decreased on Wednesday and continued to slide toward 158.00 in the European session, while Japanese Labor Cash Earnings data will be closely monitored on Friday.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
