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09.12.2022 12:45 PM
Dollar weakness: what to look out for

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The two-day gains in precious metals and currency pairs with the dollar occurred amid the weakening dollar.

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Weekly jobless claims in the US rose to 230,000. This figure will certainly be taken into account in the Federal Reserve's decision on monetary policy.

Market participants are pushing up precious metals prices as lingering fears focus on the Federal Reserve's last meeting of the year, which will take place next week, and the next inflation report—CPI. This report will be released on the first day of the two-day FOMC meeting. It will allow the Federal Reserve to see whether the partial decline in inflation recorded for October 2022 in November is a continuation of the decline in the consumer price index after reaching its highest level in June this year, when the CPI was 9.1%.

From July to October, the consumer price index consistently fell 8.5% in July, 8.3% in August, 8.2% in September and 7.7% in October.

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Traders and investors have largely priced in the high likelihood that the Fed will raise rates by 50 basis points, or a a %. This will raise the current target rate of 375–400 basis points to 425–450 basis points by the end of the year. According to the CME FedWatch tool, there is a 74.7% chance of a 50 basis point rate hike and a 25.3% chance of a 75 basis point rate hike. Although it is unlikely that the Fed will raise rates by 75 basis points for the fifth time in a row, this still continues to worry market participants about the upcoming meeting.

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Irina Yanina,
Analytical expert of InstaForex
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