Forex Today: Dollar bulls return as US Federal Reserve’s decision looms

What you need to take care of on Wednesday, November 2:

Easing US Treasury yields have helped high-yielding assets to advance early on Tuesday, with the American dollar edging lower throughout the first half of the day. The yield on the 10-year Treasury note pulled down to 3.92%, and the USD tends to slide when it breaks below the 4% threshold. The latter recovered following Wall Street’s opening, providing support to the greenback, which reached fresh intraday highs across the FX board.

Further helping the mood to improve at the beginning of the day, market talks made the round about China looking to relax its zero-covid policy. The rumour backed Asian markets, despite no official word on the matter.

The dollar benefited from upbeat US data. The October ISM Manufacturing PMI came in better than expected, printing at 50.2. The employment sub-component, however, slid to 50, while that measuring prices paid contracted to 46.6, as manufacturers noted “a decline in the prices for oil, metals and other commodities used for production.” Also, the JOLTS report showed that the number of job openings increased to 10.7 million on the last business day of September, beating expectations.

The greenback changed course, and Wall Street turned red, while US Treasury yields settled near their intraday highs.

Major pairs finished the day little changed. The EUR/USD pair settled for a second consecutive day a handful of pips below the 0.9900 mark, while GBP/USD trades around 1.1470 at the end of the American session. AUD/USD trades just ahead of 0.6400 while USD/CAD seesaws around 1.3620. Finally, the USD/CHF hovers around parity, while USD/JPY trades around 148.20.

Spot gold holds on to intraday gains, now trading at $1,649 a troy ounce, while crude oil prices also advanced. WTI trades at $88.50 a barrel.

Market players gear up for the US Federal Reserve, as the US central bank will announce its monetary policy in the American afternoon. The central bank is widely anticipated to hike rates by 75 bps, sending the main rate to 3.75%-4%. Policymakers are also expected to pave the way for a slower pace of quantitative tightening from now on, although the latest employment-related figures raised doubts on whether the Fed has room for a couple more aggressive rate hikes.

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