Dollar Firms After Fed; Jobless Claims, BoE Meeting

By Geoffrey Smith 

Investing.com — The dollar hits its highest level of the week, as the market reassesses the relative outlook for global interest rates. Weekly jobless claims and import data will provide the first test of the tapering timeline outlined on Wednesday. The Bank of England and the Czech National Bank are both expected to raise interest rates later, albeit the former’s decision is on a knife-edge. Stocks are drifting, but Qualcomm (NASDAQ:), Toyota and Booking (NASDAQ:) are all looking strong after impressive results. And OPEC meets with Russia and others but isn’t expected to cut oil importers much slack with their December output quotas. Here’s what you need to know in financial markets on Thursday, 4th November.

1. Dollar reverses losses after Fed’s dovish tapering message

The dollar reclaimed all the losses it made in response to what most analysts saw as a to normalize monetary policy at its meeting on Wednesday.

By 6:15 AM ET (1015 GMT), the that tracks the greenback against a basket of advanced economy currencies was up 0.4% at 94.265, its highest level this week, as analysts came around to the view that the chance of higher interest rates is still more realistic in the U.S. than in either or the Eurozone, where ECB President Christine Lagarde effectively ruled out the chance of a rate hike next year in comments on Wednesday.

Stock markets in Asia and Europe followed the U.S. higher overnight, comfortable with Fed Chair Jerome Powell’s assurances that the central bank is not “behind the curve” on inflation, even though it expects current supply bottlenecks plaguing the economy to last “well into next year.”

2. Multi-speed monetary tightening in Europe

For other central banks, it’s a different picture. The is expected by many to raise interest rates for the first time since the pandemic at its meeting, although the prospect of the economy cooling off may yet leave it to keep policy settings unchanged. Its decision is due at 8 AM ET.

Norway’s central bank, which has already raised interest rates once, at 0.25% but remains on track to hike again in December, while the is expected to continue the trend of aggressive interest rate hikes by central European economies when it meets later. Analysts expect a further 50 basis point hike to 2.0% in its key rate, after a 75 basis point hike last month.

Poland’s National Bank had on Wednesday, a second straight tightening in as many months.

3. Stocks set to open mixed; Qualcomm, Toyota shine

U.S. stock markets are set to open mixed later after closing at fresh record highs on Wednesday in response to the Fed’s announcement, in which Jerome Powell was at pains to emphasize no acceleration of the timeline for rate hikes.

By 6:20 AM ET, were down 20 points, or less than 0.1%, while were up 0.1% and were up 0.4%.

The key Treasury bond yield, which had risen as high as 1.60% on Wednesday, was back down at 1.57%.

Stocks likely to be in focus…