DXY appreciated 0.3% to 103.9, building on the 0.1% gain from Tuesday. The US Treasury 10Y yield increased slightly by 1.4 bps to 4.41% while the S&P 500 and Nasdaq Composite indices saw modest recoveries, rising by 0.4%, and 0.5%, respectively. US data were not weak enough to sway more Fed cut bets into the long Thanksgiving weekend. US initial jobless claims fell to 209k for the week of 18 November; consensus had expected a shallower decline to 227k from 233k (revised from 231k) in the previous week. Per the Atlanta Fed GDPNow model, the outlook for US GDP growth in 4Q23 improved to 2.1% QoQ saar from sub-2% levels. Next week’s PCE deflator will likely mirror the drop in last week’s CPI inflation. However, it will not be enough to dissuade the Fed from its unified commitment to keep monetary policy restrictive for an extended period at the final FOMC meeting of the year in mid-December. For Thanksgiving Day, the DXY is projected to remain stable when Americans focus on spending time with family, friends, and loved ones.
GBP/USD depreciated 0.4% to 1.2494, the FTSE 100 Index fell 0.2%, and the 10-year Gilt yield rose 5 bps to 4.155%. These markets reflected a lukewarm response to the Autumn Statement for Growth. It fell short of rejuvenating confidence in the UK economy, especially in the context of the general elections expected in 2024. Chancellor of the Exchequer Jeremy Hunt’s “largest business tax cut in modern British history” did not prevent the Office for Budget Responsibility (OBR) from expecting the UK economy to stagnate at 0.6% this year, 0.7% in 2024, and 1.4% in 2025. While new forecasts for 2023 were better than the -0.2% growth predicted in March, those for 2024 and 2025 were sober compared to the earlier estimates of 1.8% and 2.5%, respectively. Overall, the OBR concluded that the measures were insufficient to counter the drag from real disposable income, stemming from the Bank of England’s strategy of maintaining higher interest rates for an extended period to lower an inflation rate, which currently remains more than double the 2% target. Given these economic challenges and barring any significant depreciation of the USD, GBP/USD’s upside appears limited at 1.26.
Quote of the day
“Badly constructed houses do for the healthy what badly constructed hospitals do for the sick. Once insure that the air in a house is stagnant, and sickness is certain to follow.”
Florence Nightingale
23 November in history
In 1954, the Dow Jones Industrial Average closed above the peak it reached just before the 1929 crash.
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