Forex Today: Dollar hurt by optimism

What you need to take care of on Friday, November 11:

The American Dollar plummeted on Thursday against all of its major rivals as market participants rushed to price in a pivot in the US Federal Reserve monetary policy as soon as next December. The October Consumer Price Index unexpectedly declined by more than anticipated, as annual inflation rose by 7.7%. The core reading, which excludes volatile food and energy prices, resulted at 6.3%, easing from 6.6% in September.

Following the release, the CME Group FedWatch Tool showed that markets are pricing in an 80% probability of a 50 basis points rate hike in December, compared to 52% just before the release. Time for the US Federal Reserve to pivot. 

Optimism returned. Stocks soared, yields plunged, and risk-on flows came back to life. US indexes are up over 3% each, with the Nasdaq Composite adding a whopping 6%. On the other hand, Treasury yields shed over 20 bps, with the 10-year Treasury note currently yielding 3.83%.

EURUSD trades near a monthly high of 1.0184, while GBPUSD extends its gains ahead of the US close, now approaching 1.1700. The AUDUSD pair is about to challenge the 0.6600 area, while USD/CAD is down to 1.3350. Finally, The USDJPY pair trades around 141.80, while USDCHF is down to 0.9660.

Gold soared to fresh three-month highs, now trading at around $1,754 a troy ounce. Crude oil prices remained subdued, barely recovering some ground after the latest slump. WTI is currently changing hands at around $86.40 a barrel.

On a down note, the Politburo Standing Committee (PSC) of the Chinese Communist Party held a coronavirus-related meeting and urged to stick to the zero-covid policy. Another negative sentiment factor is the collapse of the crypto exchange FTX earlier this week, said to have a black hole of $ 6 billion. The crisis is spreading like wildfire in the crypto world, and the end is yet to be seen. Investors, however, hardly paid attention to the headlines after the CPI release, which even support the crypto market.