Pill recession warning.
In the US congressional elections, Republicans have secured limited net gains for the House of Representatives and remain in a strong position to gain control.
The Senate race remains very tight, but market expectations have switched overnight to expecting that the Democrats will maintain control. Democrats hold a 48-47 lead with five seats left to be called. There are three very tight races and final results may not be known for weeks.
The US IBD consumer confidence index dipped to 40.4 for November from 41.6 the previous month which was below market expectations and close to an 11-year low.
US Treasuries overall have posted limited gains with the 10-year yield retreating to just below the 4.15% level.
Equity markets posted net gains on Tuesday, but US futures edged lower in Asia on Wednesday with no further buying following the US elections.
The dollar dipped again on Tuesday with hopes for a shift in Chinese coronavirus policies and expectations that the Federal Reserve will slow the pace of rate hikes to assess the impact of monetary tightening seen so far.
The dollar index dipped to 8-week lows before a limited correction on Wednesday.
Bank of England chief economist Pill stated that the central bank is not going to move at a pre-defined pace at every meeting, but there is more to do and rates need to increase further to tighten monetary policy.
He added that the bank should not be seen as inflation nutters and that at some point the wider economic outlook needed to be considered. According to Pill, the economy is entering a recession and that it is a difficult trade-off environment for monetary policy.
Swiss National Bank Chair Jordan stated on Tuesday that the central bank needed to take determined action to check rising prices. He added that mixed signal on inflation might tempt policymakers to postpone further action until uncertainty has eased, but uncertainty must not be seen as indecision.
The reports that FTX was in serious difficulties and that non-US operations will be taken over by rival Binance triggered a wave of liquidation with bitcoin and all major coins sliding in US trading.
Bitcoin slumped 15% before a limited correction.
There were no major Euro-Zone developments during Tuesday. Mild weather conditions in Europe helped support the Euro. Lower US yields sapped dollar support during the day. EUR/USD was able to make a decisive break above 1.0000 and traded to highs near 1.0100 before correcting. EUR/USD traded around 1.0070 on Wednesday as the US elections failed to trigger further dollar selling at this stage.
Lower yields sapped USD/JPY support and the yen also posted net gains on the crosses. USD/JPY dipped to lows at 145.20 before a recovery to 145.80.
The Swiss franc failed to gain significant support from National Bank Jordan’s comments. EUR/CHF edged above 0.9900 on Tuesday with further gains to 0.9930 on Wednesday. USD/CHF did post significant losses to below 0.9850 before a slight correction to 0.9870.
BoE Pill’s comments sapped Sterling support. The UK currency regained ground later amid a dollar slide and solid risk appetite. GBP/USD rallied powerfully from 1.1430 lows to 1.1600 highs before a fresh retreat to 1.1540.
Commodity currencies posted net gains but faded from intra-day highs. AUD/USD peaked at 0.6550 before a retreat to 0.6500 and traded just below this level on Wednesday. USD/CAD dipped below 1.3400 before a rally to 1.3445 as lower oil prices sapped support.