Last week was marked by meetings of several central banks. Unsurprisingly, the ECB left its rates unchanged at 2.00%, while the Fed lowered its rates by 25 basis points. Quantitative tightening will begin on December 1, while the interest generated by its investments will be reinvested in the purchase of T-bills, in order to put a little oil (liquidity) in the wheels of the economy (the stock market). The underlying message was that everything was fine against a backdrop of a resilient economy and tangible signs that imported inflation would be contained because it would be absorbed largely by importers and retailers, leaving consumers relatively unscathed. However, the Fed chairman's suggestion that a rate cut in December was far from certain threw a spanner in the works, causing tension in the bond market, renewed interest in the dollar, and a decline in the stock market.
Source: Bloomberg
Indeed, the dollar index (DXY) has just exceeded 99.50, ultimately confirming the break below 1.1500 on the EUR/USD. The USD/JPY has just rallied to 154.15/50, the last line of defense before the previous highs of 2025 at 158.85/159.75. The first support level is around 150.50. The Aussie is playing tricks on us: after breaking through 0.6545 and grazing 0.6630, it seems to be under pressure again, while the Kiwi has stumbled on its resistance at 0.5800 and remains in its downward trend, with a medium-term target around 0.5505/0.5485. Finally, the USD/CAD held well above 1.3875 to preserve its bullish structure towards 1.4150.
