Fed holds, Dollar slides and stocks rise

Markets will continue to digest the FOMC meeting. During the Asian session, Australia is scheduled to release trade data and home loan figures. Later in the day, Switzerland will report consumer inflation data. More US employment data is due with the weekly jobless claims, leading up to Friday’s NFP.

Here is what you need to know on Thursday, November 2:

The Federal Reserve (Fed) decided to keep the fed fund target range unchanged at 5.25% to 5.50%, which was in line with market expectations. The statement issued by the Fed was similar to the one released in September, and Chair Jerome Powell’s remarks did not contain any surprises.

Analysts at Wells FArgo on the FOMC:

For the third time in the past four policy meetings, the FOMC decided to keep rates on hold today, although it continues to keep the door open to hiking again. It appears to us that the bar for further rate increases is getting increasingly higher.

The US Dollar Index erased its gains following Fed Chairman Powell’s press conference. After trading above 107.00 and reaching weekly highs, the DXY closed below 106.70. The US Dollar faced downward pressure due to increased risk appetite and higher demand for Treasuries. In the stock market, the Dow Jones gained 0.67%, while the Nasdaq rose by 1.64%.

Regarding US data releases on Wednesday, the results were mixed. The ADP employment report showed a modest increase in private payrolls by 113,000, falling below the market expectation of 150,000 but surpassing September’s figure of 89,000. The JOLTS jobs opening data exceeded market consensus at 9.55 million. However, the ISM Manufacturing PMI unexpectedly dropped to 46.7 in October, lower than the anticipated reading of 49. These figures had minimal impact on the markets.

Upcoming data from the US includes the weekly jobless claims and Q3 Unit Labor Costs. On Friday, the focus will be on the release of Nonfarm Payrolls.

EUR/USD trim losses after the Fed. It traded under the critical support level of 1.0520 for a few minutes, and then rebounded to 1.0580, supported by the weaker US Dollar.

GBP/USD remained flat around 1.2145 after briefly trading below 1.2100. The pair continues to move sideways with a downside bias. The Bank of England is expected to keep the key rate unchanged at 5.25%, with a potentially divided vote. Governor Andrew Bailey will hold a press conference following the decision.

Japanese authorities expressed concerns about “one-sided moves,” but USD/JPY remained firm above 150.00, trading near multi-decade highs. It declined below 151.00 after the FOMC, affected by lower Treasury yields.

USD/CHF lost ground and traded below 0.9100, moving away from monthly highs. Switzerland will report its October Consumer Price Index, with the headline figure expected to remain at 1.7% YoY.

AUD/USD had its best day in weeks, consolidating gains after the Fed decision and approaching the 0.6400 area. If it surpasses that level, further gains are likely. Positive market sentiment is crucial for the pair. Australia will release trade data on Thursday.

USD/CAD reached fresh one-year highs at 1.3898 but then retraced to 1.3860. The pair faces strong resistance near 1.3900.

Gold experienced its third consecutive day of losses, however it closed at $1,978 after bottoming at $1,969.90. Silver also trimmed losses during the American hours and ended around $22.70.