US Dollar strengthens as Fed Minutes dampen hopes of quick interest-rate cuts

• The Greenback trades in the green against every major G20 peer.
• Traders are seeing US yields halt their decline as the Fed dampens hopes for a quick rate cut. 
• The US Dollar Index flirts with a jump to 104.00.

The US Dollar (USD) trades stronger on Wednesday ahead of the Thanksgiving festivities on Thursday. The publication of the Fed Minutes from their recent rate decision revealed that the whole board agrees that cuts are not in the plan for the upcoming meetings. This pours cold water on the market bets that cuts might be very close, even in December. 

As if the devil is at play in this turnaround for the US Dollar, the calendar could  help the US Dollar Index (DXY) increase even further. Next to Durable Goods and Jobless Claims data, the consumer inflation expectations data from the University of Michigan could confirm that the Fed is correct in not letting loose too quickly. Although it is the final reading, any upward revision will be good for some more US Dollar strength later this Wednesday. 

Daily digest: Not going quietly without a fight 

A very full calendar this Wednesday ahead of the Thanksgiving festivities on Thursday.

• Data releases kick off at 12:00 GMT, with the Mortgage Bankers Association (MBA) Mortgage Applications for last week. Previous was at 2.8%.
• At 13:30 GMT, a very eventful moment with a lot of data points due to come out:
  1. Durable Goods Orders are expected to head from 4.6% to -3.1% for October.
  2. Durable Goods Orders without Transportation are expected to head from 0.4% to 0.1%.
  3. Initial Jobless Claims for last week are expected to decline from 231,000 to 225,000.
  4. Continuing Jobless Claims are expected to head from 1,865,000 to 1,875,000.
• Next focal point will be at 15:00 GMT with the University of Michigan numbers.
  1. The Consumer Sentiment Index is expected to head from 60.4 to 60.5.
  2. The 5-year Inflation expectations are expected to stay stable at 3.2%.
  3. Bear in mind that these are final readings for the month of November.
• Equities are mildly in the green as stock markets were not seeing any help from rather disappointing Nvidia earnings. The Sam Altman saga with Microsoft and AI is not helping either. Mild positive numbers are being noticed across Asia and Europe, with US futures flat ahead of the US opening bell. 
• The CME Group’s FedWatch Tool shows that markets are pricing in a 94.8% chance that the Federal Reserve will keep interest rates unchanged at its meeting in December. A juicy sidenote is that now 5.2% even thinks a hike might be at hand. 
• The benchmark 10-year US Treasury Note yield trades at 4.40%, and is off the lows from 4.38% earlier. 

US Dollar Index technical analysis: off the lows

The US Dollar is snapping the game plan that should have brought the US Dollar Index below 103.00 for this week. Help came from the US Federal Reserve Minutes, which showed that all board members were unanimous that cuts are nowhere near an option. Markets got spooked and are seeing ample amounts of flow back into the Greenback, with the US Dollar Index trying to head back above the 200-day Simple Moving Average at xxxx. 

The DXY is back above the 200-day SMA near 103.62, and will need to have a daily close above it in order to consolidate the region. Look for a further recovery bounce towards the 100-day SMA near 104.20. Should the DXY be able to close and open above it later this week, look for a return to the 55-day SMA near 105.71 with 105.12 ahead of it as resistance. 

The 200-day SMA will try to play its role again as a crucial pivotal supportive level against any downturn. Should the index snap this level again later this week, the psychological 100.00 level comes into play. With a very slim economic calendar after this Wednesday and several US market participants off the desk for the holidays throughout the rest of this week, there is room for a potential big downturn.