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Traders demonstrate caution ahead of US GDP and Fed Chair’s keenly awaited speech

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Traders demonstrate caution ahead of US GDP and Fed Chair’s keenly awaited speech

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The US dollar index edged higher on Tuesday touching a high of 97.50, shrugging off less hawkish than expected comments from Fed member Clarida yesterday afternoon, who said that monetary policy is not a pre-set course.

He mentioned that interest rates were closer to neutral but there is no agreement at the FOMC about ‘how close’ to neutral they are. He said hikes should be dependent, noting that it was important to see capex rebound after a soft result in Q3. In a separate speech, Atlanta Fed President Raphael Bostic said the central bank "is not too far" from a neutral interest rate and “neutral is where we want to be”. The Fed has raised rates three times this year and is expected to increase again in December.
It’s a big day for the dollar today. No doubt the US/China trade rhetoric will ramp up in the run up to the G20 on Friday. Meanwhile, US Q3 GDP is due for release with the market looking for a print of 3.6% q/q. Fed Chair Powell is due to speak later on too, in what’s being touted as his most important speech yet. Investors will be looking to the speech for any softening in his tone after he indicated in October that the Fed was not close to halting rate hikes.



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