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US Dollar Rally Extends, NZDUSD Sinks To 3-Month Low

FOREX
  • Gradual and persistent dollar buying was the order of the day on Wednesday ahead of the FOMC minutes and the US Thanksgiving holiday tomorrow. The dollar index rose another 0.4%, extending the week's gains to just shy of 1%. The minutes from the November Fed meeting had little impact on currency markets following the release.
  • EURUSD continued its downward trajectory, falling below 1.12 for the first time since July 2020 and meeting a minor support at 1.1185. The move lower continues to cement the downtrend and price is trading below the base of the bear channel drawn from the Jun 1 high.
  • Conversely, USDJPY climbed to fresh highs above the March 2017 highs of 115.51. The next target would be 116.09, the 1.764 proj of Apr 23 - Jul 2 - Aug 4 price swing.
  • A 25bp rate hike and updated RBNZ guidance fell below market expectations, prompting a fourth consecutive day of losses for the New Zealand dollar. Kiwi was bottom of the G10 pile on Wednesday with greenback strength exacerbating the move lower. NZDUSD trades down 1.15%, briefly reaching a three-month low.
  • In emerging markets, the Turkish Lira came roaring back following Tuesday's collapse. There was another huge range for USDTRY (11.5871-13.1667) amid continued poor liquidity, however, Wednesday saw the Lira recover and settle around 7% in the green. MXN was the notable underperformer, losing nearly 2% amid a new central bank governor announcement. USDMXN came within touching distance of the years highs before settling around +1% for the session.
  • With the US out tomorrow for Thanksgiving, markets are expected to have a subdued tone. The focus should fall on the ECB Minutes and any commentary from scheduled speakers - ECB's LaGarde and BOE's Bailey.
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