Risk markets were touch and go as month end approached ahead of Fed Chairman Powell’s address on the economy on Wednesday and US Nonfarm Payrolls on Friday.had worsened on Monday after protesters and police clashed over the stringent COVID restrictions, supporting the US Dollar index, DXY, that had otherwise fallen to 106.82 from a 20-year high of 114.78 on Sept. 28.
Meanwhile, the US central bank is expected to hike rates by an additional 50 basis points when it meets on Dec. 13-14, though the odds of a 75-basis-point increase have risen over the past several weeks and now stand at a 37% probability. WIRP suggests that is fully priced in, with around 15% odds of a larger 75 bp move. The swaps market is still pricing in a peak policy rate of 5.0%, with small odds of a 5.25% peak.
The US 10-year yield was up 6bp to 3.74%, weighing on the euro which was down some 0.1% to 1.0330. The inflation rate in Germany slowed to 10% in November from 10.4% in October but remained close to high levels not seen since the reunification. The sentiment remains supportive of the Euro in that the European Central Bank remains committed to raising interest rates to dampen high inflation. Thehovered at 1.1950 and down 0.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
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