Daily Forex Market Report 29-Nov-2022: Euro and US hawks square up, GBP makes early morning gains

Investors are underestimating just how aggressive the Federal Reserve will be in the new year.

That’s according to Federal Open Market Committee (FOMC) member James Bullard, who yesterday stated that the base rate needs to rise as high as 5.25% in order to be "sufficiently restrictive" on inflation.

FOMC members John Williams and Thomas Barkin made similar comments on Monday, although the latter stated his preference for slowing the pace of rate hikes.

Those hawkish comments offered a boost to the US Dollar Index (DXY), which closed yesterday’s session at 106,29, a full 1.3% higher from intraday lows.

This morning’s Asia session has seen the greenback retract though, with DXY heading back to 106.1 and the GBP/USB pair gaining 30 pips to 1.198.

GBP/USD cuts back on hawkish Fed comments – tradingview.com

After cutting back 1.5% from yesterday’s intraday highs, the EUR/USD pair opened this morning at 1.034 and has since inched upwards to 1.035.

It should be noted that European Central Bank president Christine Lagarde also made some hawkish comments to the European Parliament yesterday, even if today’s consumer price index readings from Spain and Germany are expected to see a reduction in prices. Today’s mortgage approvals data should shed some light on the UK’s struggling housing market.

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