Kiwi weakens, NOK & CAD rebound and Turkish lira plummets
09:59, 24 November 2021
Major currency pairs traded at narrow ranges overnight, with the exception of the New Zealand dollar (NZD), which was down 0.5% against the US dollar at 10:00 GMT, after the Reserve Bank of New Zealand (RBNZ) raised its benchmark rate by just 25 basis points (bps), falling short of market expectations of a 50bps increase.
The DXY index, which measures the US dollar's performance versus a basket of six currencies, was up 0.25% on the day to 96.66, hitting a new year-to-date high.
EUR/USD fell to 1.1210 (-0.3%) on worries that Germany may reimpose wide restrictions a day after it confirmed record-high Covid-19 cases across the country.
Oil-linked currencies recovered as oil prices rose 3% yesterday, despite the US releasing strategic oil reserves jointly with India, China, Japan, South Korea and the UK. Markets had already priced in a bigger stock release, and all eyes are now on whether OPEC+ producers will respond by delaying their planned 400,000 barrels-per-day (b/d) increase. In response, the Norwegian krone (NOK) rose by 0.7% yesterday, snapping a streak of ten consecutive sessions of losses, while the Canadian dollar (CAD) crept higher by 0.2%. Both currencies were 0.1% weaker this morning.
The Turkish lira (TRY) continued to weaken Wednesday, plummeting as much as 12% as President Recep Tayyip Erdogan campaigned for another round of interest rate cuts – describing it as “an economic fight of independence” – in order to boost exports and economic development.
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Forex Daily Matrix – 24 November 2021
The US Dollar Index (DXY) was last at 96.66, hitting new year-to-date highs.
Earlier this week, the re-appointment of Jerome Powell as Fed Chairman aided the greenback’s advance by raising investors’ expectations for a faster pace of rate hikes next year. Money markets are now pricing in a greater likelihood of three Fed rate hikes by the end of 2022.
On the data front, the US Manufacturing Purchasing Managers’ Index (PMI) increased by 0.7 points to 59.1 in November, matching market expectations after three consecutive monthly falls. While demand remains robust, production has been constrained by shortages of commodities and labour, according to the survey. However, the Services PMI edged down unexpectedly from 58.7 in October to 57. Consensus had been for a slight increase to 59.
Today, the November FOMC minutes are released, which may add to the governors’ debate on speeding up tapering.
Additionally, the US core PCE print – the Fed’s favourite gauge of inflation – will also be out today. The recent increase in CPI inflation in October suggests that PCE inflation could continue to grow, with core PCE inflation expected to exceed 4% year-on-year for the first time in 30 years.
US dollar (DXY) technical levels:
- 52-week high: 96.66
- 52-week low: 89.212
- 50-day moving average (1-day chart): 94.22
- 200-day moving average (1-day chart): 92.32
- 14-day Relative Strength Index (RSI) (1-day chart): 74.22
Chart of the day: The Turkish lira crashed by almost 30% in November alone
The euro was last at 1.1210 against the US dollar, down 0.3% from its previous close.
In November 2021, the Ifo Business Climate indicator for Germany declined for the sixth month in a row to 96.5, its lowest level since April and slightly below market estimates of 96.6.
Yesterday, Germany recorded the highest number of new daily Covid-19 cases (68,000) and Health Minister Jens Spahn will decide today whether to implement stricter measures.
EUR/USD technical levels:
- 52-week high: 1.2349
- 52-week low: 1.1204
- 50-day moving average (1-day chart): 1.1572
- 200-day moving average (1-day chart): 1.1849
- 14-day Relative Strength Index (RSI) (1-day chart): 26.37
Cable (GBP/USD) was last at 1.3366, down 0.08% from its previous close.
UK PMIs continue to indicate that the British economy is performing well despite supply-side constraints and shortages.
Yesterday, during a speech at the Adam Smith Business School, University of Glasgow, Jonathan Haskel, an external member of the Monetary Policy Committee, said that the rigidity of labour market conditions warrant a rate hike by the BoE to prevent labour costs from rising faster than productivity.
GBP/USD technical levels:
- 52-week high: 1.4248
- 52-week low: 1.3133
- 50-day moving average (1-day chart): 1.3613
- 200-day moving average (1-day chart): 1.3828
- 14-day Relative Strength Index (RSI) (1-day chart): 35.64
Forex Performance Heatmap – 24 November 2021
Other currency pairs (% change from previous close):
- USD/JPY -0.09%
- USD/CHF +0.28%
- USD/CAD +0.12%
- AUD/USD -0.07%
- NZD/USD -0.48%
- USD/MXN +0.2%
- USD/ZAR -0.06%
- USD/TRY -2.19%
- USD/RUB +0.28%
- EUR/NOK +0.03%
- EUR/SEK +0.16%
- EUR/PLN -0.60%
- EUR/HUF -0.48%
Read more: Lira continues to fall on Erdogan’s push for lower interest rates
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