The dust seems to have settled after the U.S. election results were confirmed, as the U.S. dollar pared some gains while Treasury yields retreated.

Risk assets like U.S. equities and bitcoin, on the other hand, carried on with their rallies as the FOMC maintained its dovish bias.

Which headlines and economic updates drove price action in the past sessions?

Headlines:

• Japanese average cash earnings steadied at downgraded 2.8% year-on-year gain (initial reading at 3.0%, consensus at 3.0%) in September, as price increases outweighed wage growth
• Australia goods trade balance narrowed from downgraded 5.28B AUD to 4.61B AUD as exports fell 4.3% in Sept while imports fell 3.1%
• China trade surplus grew from $87.1B to $95.7B ($73.5B forecast) in Oct as exports rose 12.7% y/y while imports fell 2.3%
• Germany industrial production fell by 2.5% m/m in September after downwardly revised 2.6% uptick in August
• Germany trade surplus shrank from 21.4B EUR to 17.0B EUR (vs. 20.8B EUR expected) in September
• France private payrolls for Q3: -0.1% q/q (0.0% expected, -0.1% previous)
• Eurozone retail sales for September: 0.5% m/m (0.4% expected, 0.2% previous)
• Bank of England (BOE) cut interest rates by 0.25% from 5.00% to 4.75% as expected in a 8-1 vote
• During the BOE press conference, Governor Bailey noted that disinflation is faster than expected and that he does not expect interest rates to return to very low levels
• In the quarterly BOE Monetary Policy Report, policymakers downplayed the impact of recent U.K. budget changes and mentioned that they “will not cut rates too quickly or too much”
• U.S. weekly initial jobless claims: 221K (223K expected, 218K previous)
• U.S. preliminary nonfarm productivity slowed from 2.5% to 2.2% q/q (2.6% expected) in Q3; Unit labor costs accelerated from 0.4% q/q to 1.9% (1.1% expected)
• U.S. final wholesale inventories for September: -0.2% m/m (-0.1% expected, -0.1% previous)
• FOMC cut rates by 0.25% as expected in November decision, citing that inflation “made progress towards objectives” and that election results don’t impact policy in near-term

Broad Market Price Action:

Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView

Thursday’s price action seemed to be a mix of calm after the U.S. election storm and some profit-taking, as most asset classes moved in consolidation early on while bitcoin and the U.S. dollar saw pullbacks.

BTC/USD retreated from the $76K levels during the Asian trading session, before bottoming out during London market hours and pulling off yet another strong rally to fresh all-time highs at $76.8K, as the “Red Wave” across U.S. Congress prompted speculations of more crypto-friendly regulations.

WTI crude oil also had a topsy-turvy day, as it started off strong then turned lower right around China’s trade balance release, before staging quite the rebound during the New York session. U.S. equity indices extended their post-election rally, with the S&P 500 index and Nasdaq chalking up their third consecutive day in the green.

Treasury yields, on the other hand, turned lower in the hours leading up to the FOMC statement, as traders likely adjusted positions in anticipation of a Fed rate cut and a potentially dovish bias moving forward.

FX Market Behavior: U.S. Dollar vs. Majors:

Overlay of USD vs. Major Currencies Chart by TradingView

Major pairs were off to a bit of a cautious start, before the U.S. dollar turned lower across the board during Asian market hours, particularly against the Aussie and Kiwi which appeared to draw extra support from China’s trade numbers.

The U.S. currency managed to pull higher a few hours into the London session, with USD/CHF briefly recovering to positive territory, before another wave lower ensued. Sterling got a boost from the BOE decision, as the central bank cut rates as expected but emphasized a “gradual approach” to further easing.

The weekly U.S. initial jobless claims report came in broadly in line with consensus at 221K but higher than the earlier 218K uptick. Quarterly unit labor costs and non-farm productivity beat estimates in Q3, although dollar bears seemed to focus on downgrades to the previous period’s data, leading to an overall bearish USD reaction.

Prices leveled off ahead of the FOMC decision and press conference, which eventually spurred another dip for the U.S. dollar as the Fed appeared committed to its easing plans, despite the U.S. election outcome and calls for a December pause.

Upcoming Potential Catalysts on the Economic Calendar:

• SNB Governing Board Member Martin’s speech at 8:00 am GMT
• Swiss SECO consumer climate index at 8:00 am GMT
• BOE MPC member Pill’s testimony at 12:15 pm GMT
• Canada’s employment report at 1:30 pm GMT
• U.S. preliminary UoM consumer sentiment index at 3:00 pm GMT
• FOMC member Bowman’s speech at 4:00 pm GMT
• Chinese CPI at 1:30 am GMT (Nov. 9)

The spotlight could shift to the Canadian economy, which is gearing up to print its October employment data during the U.S. session. Make sure to check our Event Guide for this top-tier release, as it could spark additional volatility for CAD pairs before the week comes to a close, and don’t forget to keep an eye out for the U.S. preliminary UoM consumer sentiment figure as well.

Check out our brand new Forex Correlation Calculator if you’re planning on taking any trades!