Dollar benefits from risk-off mood

What you need to know on Wednesday, November 10:

The greenback maintained its tepid tone during the Asian session but became more attractive during US trading hours. The catalyst for the dollar’s demand was another sign of inflationary pressures spurring risk-off. Wall Street edged lower after its overseas counterparts posted intraday gains, following the release of the US Producer Price Index, confirmed at 8.6% YoY in October.

The EUR/USD pair tried to advance past 1.1600 a couple of times but was rejected by persistently strong selling interest. European Central Bank policymakers commented on the future of the monetary policy. Klaas Knot said that conditions for a rate hike are very unlikely to be met in 2022, while top supervisor  Andrea Enria said low ECB interest rates are now hurting bank margins more than they are boosting lending volumes. The European Central Bank maintains a wait-and-see stance, considering higher prices will be temporary.

The GBP/USD pair hovers around 1.3550 after a failed attempt to recover above 1.3600. Irish foreign minister Simon Coveney said that if the UK triggers Article 16 over Northern Ireland would prompt retaliatory action on Sunday, adding on Tuesday that it would trigger a “very robust response” from the EU.

Commodity-linked currencies fell alongside Wall Street. AUD/USD trades in the 0.7370 price zone, although the USD/CAD pair eased from its intraday high amid rallying oil prices.

The EIA cut its 2022 forecast of world oil demand by 130,000 barrels per day, raising this year forecast for oil demand by 60,000 barrels per day.

Gold trades at fresh one-month highs around $1,830 a troy ounce amid the dismal market’s mood. Government bond yields, however, edged lower with that on the 10-year US Treasury yield currently at 1.44%.

The US will publish the October Price Index on Wednesday, foreseen at 5.3% YoY.

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