Financial Breakfast on November 3: The U.S. Dollar Strengthens and Gold Falls, Waiting for the Fed's Interest Rate Decision Guidelines

On Tuesday (November 2) the U.S. dollar and yen moved higher, and traders were waiting for the crucial central bank decision later this week; the Australian dollar fell after the Reserve Bank of Australia signaled to be patient in tightening policy, and fell more than almost All G-10 currencies. Gold futures closed lower, and the market expects that the Fed’s monetary policy makers will announce plans to start reducing the scale of monthly bond purchases. U.S. oil fell more than 1% in late trading. API data showed that US crude oil inventories surged by 3.6 million barrels last week. In the context of increasing pressure to increase crude oil production, the market awaits the results of OPEC+'s Thursday meeting.

Commodity closing, COMEX December gold futures closed down 0.4%, at 1,789.40 US dollars per ounce. WTI December crude oil futures closed down 0.14 US dollars, or 0.16%, to 83.91 US dollars per barrel; Brent January crude oil futures closed up 0.01 US dollars, or 0.01%, to 84.72 US dollars per barrel.

U.S. stocks closed: the S&P 500 index rose 0.4% to 4,630.65 points; the Dow Jones Industrial Average rose 0.4% to 3,052.63 points; the Nasdaq Composite Index rose 0.3% to 1,5649.6 points; the Nasdaq 100 index rose 0.4 %, reported 15972.49 points; Russell 2000 index rose 0.2%, reported 2,361.861 points

Wednesday preview

17:30 European Central Bank President Lagarde, Governing Committee Centeno and Costa delivered speeches 02:00 AM Fed announced interest rate resolution 02:30 Fed Chairman Powell held a press conference

List of major global markets

As the Federal Reserve will announce its monetary policy decision on Wednesday, the benchmark U.S. stock market index hit a record high. Supporting the stock market's continued rise is that despite the soaring commodity prices and the chaos of the supply chain, the profit margins of listed companies have remained incredibly intact.

Many companies are able to pass on the impact of rising costs to consumers, resulting in most companies' profits exceeding expectations. No matter what the Fed says or does on Wednesday, people think that US interest rates will still be relatively low, which bodes well for the stock market.

BMO Capital Markets strategist Ian Lyngen said on Tuesday that although the stock market may be slowing down relative to the past 18 months, the reality is that risk assets have a good foundation and continue to perform well.

Precious metals and crude oil

Gold prices fell on Tuesday. Spot gold price closed at US$1,787.76 per ounce, down 0.31%, and spot silver fell more than 2%. The US dollar and the stock market rose before the results of the highly anticipated Fed meeting. This meeting may provide The Fed's interest rate hike schedule.

Kitco Metals senior analyst Jim Wyckoff said that before the Federal Reserve issued a statement on Wednesday, the stock market continued to strengthen and continued to crack down on safe-haven gold. But Wyckoff said that recent concerns about inflation have limited the downside of gold and boosted buying interest.

When the Fed concludes its two-day policy meeting on Wednesday, it is expected to approve a plan to reduce the scale of bond purchases.

A stronger US dollar index makes gold more expensive for holders of other currencies.

FXTM senior research analyst Lukman Otunuga said in a report that the price of gold may fluctuate in the next week, or will be affected by the trend of the US dollar, U.S. bond yields, inflation expectations and global risk sentiment.

U.S. crude oil fell more than 1% in late trading. API data showed that US crude oil inventories increased by 3.6 million barrels last week. Traders also looked forward to the OPEC+ meeting on Thursday.

Raymond James & Associates analyst Pavel Molchanov said that OPEC is facing political pressure from importing countries to increase supply, because oil prices are at the highest level in seven years, balancing demand and political pressure-it seems that maintaining the status quo is OPEC's most logical approach right now.

Foreign exchange

The U.S. dollar rose on Tuesday, and the Federal Reserve began a two-day policy meeting. It is expected to announce that it will begin to reduce the large-scale asset purchase program implemented at the beginning of the new crown epidemic. In recent weeks, investors have digested the expectations that central banks will tighten their policies. They believe that policy makers' concerns about rising inflation are enough to bring the easing policy during the epidemic to an end. The RBA’s attitude was more dovish than investors expected, causing the Australian dollar to record its biggest one-day drop since September 29, and it was the first major central bank to hold a meeting this week.

The U.S. dollar index rose 0.26% to 94.11; the market has fully digested the Fed’s expectation of a reduction statement and will look for any clues as to when to start raising interest rates.


Western Union Business Solutions senior market analyst Joe Manimbo said that this will be an interesting thing, considering that the market has become a bit aggressive in digesting multiple interest rate hikes next year, we will have to see if the Fed will hit back on these expectations. The interest rate debate is not all about inflation. It is also about the job market. I think the Fed wants to see the job market really turn around before it admits that policymakers are considering raising interest rates.

The Reserve Bank of Australia did not show the hawkish tendencies that many had expected. The Australian dollar fell 1.29% against the US dollar to 0.7429, the lowest since October 19. Leveraged funds sold the Australian dollar. Previously, the Reserve Bank of Australia Chairman Philip Lowe said that inflation " It may take a while" to return to the target level.

The pound to US dollar fell 0.4% to 1.3606, the lowest since October 13. The Bank of England will hold a meeting on Thursday, and the market is digesting interest rate hike expectations.

The euro to dollar fell 0.23% to 1.1579; the yen strengthened before the local holiday in Japan, and traders adjusted positions for the Fed’s policy meeting. The dollar fell less than 0.1% to 113.96 against the yen.

The Swiss franc briefly touched an 18-month high against the euro. The euro once fell as low as 1.0544 Swiss francs, the lowest since May 2020, and then rebounded to 1.05875, rising 0.33% on the day. The Swiss franc has been rising against the US dollar, climbing 0.6% on the day to 0.9146.

International news

[In the week of October 29 in the United States, API crude oil inventories increased by 3.59 million barrels, Cushing crude oil inventories decreased by 882,000 barrels, gasoline inventories decreased by 552,000 barrels, and refined oil inventories increased by 573,000 barrels]

[U.S. President Biden: If the proposal contains the details that Senate Democrat Manchin wants, he will vote for it. The new crown epidemic is an important reason for rising prices. The high oil prices are because OPEC members refuse to increase production. The issue of the candidate for the chairman of the Federal Reserve has not yet been decided, and the candidate will be announced soon. Environmental, COVID-19 and supply chain issues are global challenges]

[The Reserve Bank of New Zealand: The financial system is ready to support economic recovery. Housing prices are higher than sustainable levels. It is planned to increase the bank’s minimum core financing ratio to 75% on January 1, 2022. Negotiations will be held on the debt-to-income ratio limit soon. Companies need to adapt to the new crown epidemic. Future interest rate changes depend on the medium-term outlook. Over time, it is expected that further monetary stimulus measures will be removed]

[The Baltic Dry Bulk Freight Index fell 7% due to the bleak outlook for iron ore demand] The Baltic Dry Bulk Freight Index fell to its lowest level in three months on Tuesday due to a sharp drop in the iron ore futures of the Dalian Commodity Exchange. Capesize ship freight. The Baltic Dry Bulk Freight Index fell 241 points, or 7%, to 3187 points, the lowest point since July 28. The Capesize shipping rate index fell 466 points, or 11.1%, to 3736 points, the lowest since July 22. The average daily profit of the Capesize fell by US$3,858 to US$30,987. The Panamax freight index fell 171 points, or 4.5%, to 3644 points, the lowest level in nearly two months, and the average daily profit of Panamax ships fell by US$1,540 to US$32,797. The Handysize Freight Index fell 123 points to 2,919 points, the lowest since the end of July.

Domestic news

[Beijing Stock Exchange: On the day when the selected layer of the New Third Board was transferred to the Beijing Stock Exchange, its stock trading imposed a 30% rise and fall limit] Today, on November 2, the Beijing Stock Exchange issued two basic business rules, plus the previous Several of the issued, so far the 7 basic business rules of the Beijing Stock Exchange have all been released. It is clarified that the listed companies on the selected layer of the National SME Share Transfer System will be transferred to the Beijing Stock Exchange listed companies. On the day of the translation, a 30% price limit was imposed on its stock trading, with the closing price of the last trading day of the select layer as its previous closing price. (CCTV)

[The price of thermal coal was cut in 10 trading days, and the downstream cost collapse effect appeared] In just ten trading days, the price of domestic thermal coal futures has fallen by more than half at a relatively high point, and a number of commodities that were not strong in the previous period have also stepped out of the shadow line. . The sudden fluctuation of upstream prices in the short-term inverted V will undoubtedly have a significant impact on all links of the industrial chain. With the fall of coal prices, the effect of cost collapse in downstream industries has become apparent. Under the negative feedback from the downstream caused by the abnormally high energy prices in the early stage, combined with the continuous background of the coal supply policy, the coal market is unlikely to have a sharp rise in the fourth quarter. (Securities Times)