EM countries finally trend up, China becomes more stable

      "Global economic growth will be maintained through 2018, underpinned by solid underlying growth in advanced economies and a broadening recovery in emerging markets," Moody's Investors Service noted in its global macroeconomic outlook report for 2018-2019.

Moody's expects above-trend global GDP growth of 3.2% in 2018 and 3.1% in 2019, similar to 2017 and up from 2.5% growth in 2016.
Unlike in recent years, Moody's expects growth to be more broad-based and sustainable in the year ahead.
Growth in G20 advanced economies is expected to be stable, with growth of approximately 2.0% in 2017, 2018 and 2019, compared with 1.5% in 2016.
We are seeing growth broadening globally, with emerging market countries finally trending up and China becoming more stable.
Moody's expects that emerging market countries will grow at a rate of 5.4% in 2018, exceeding the forecasted 2017 growth rate of 5.0%.

US Dollar on the defensive below 95.00

• US 10-year yields remain soggy around 2.31%.
• Recent tops beyond 95.00 keep capping the upside.
• US tax reform headlines to drive sentiment near term.

DXY is trading in a soft fashion on Wednesday, with the upside still limited by recent peaks above 95.00 the figure.

US Dollar looks to US politics for direction

     The index has eased some ground following yesterday’s test of tops beyond the key 95.00 barrier amidst soggy performance of US yields, rising EUR/USD and concerns over the US tax reform.
In fact, renewed uncertainty surrounding the US tax reform proposed by the Trump’s administration and fears over probable delays has been weighing on the buck since early Asian hours and keeping buyers at bay.

     Additionally, yields of the key US 10-year benchmark keep the choppy note so far today around the 2.31% area and without a clear direction.
On the US data front, the official report on US crude oil supplies by the DoE is next on tap following yesterday’s draw in stockpiles reported by the API.

US Dollar relevant levels

     As of writing the index is losing 0.08% at 94.85 and a breakdown of 94.75 (10-day sma) would open the door to 94.42 (low Nov.2) and finally 94.03 (23.6% Fibo of the 2017 drop). On the upside, the immediate resistance aligns at 95.15 (high Nov.7) seconded by 95.90 (38.2% Fibo of the 2017 drop) and then 96.66 (200-day sma).

Fed is set to take a hawkish turn

"Markets may have shrugged off the upcoming change at the top of the Fed, but they remain complacent about the risks of faster rate rises next year," notes James Knightley, Chief International Economist at ING.

Markets are too complacent on rate hikes.
After weeks of twists and turns, markets breathed a sigh of relief as President Trump opted for continuity in his nomination of Jerome Powell for Fed Chair. The fact that Trump opted for a "gradualist" on interest rates, rather than the potentially more hawkish Taylor or Warsh, has contributed to the Treasury curve flattening to its lowest in 10 years.
However, we feel the market is being too complacent. The combination of upside risks to growth and mounting inflationary pressures, as well as a hawkish rotation in the make-up of Fed voters, suggests that markets are too cautious in only pricing in one hike next year. We expect two, with risks of more rather than fewer.
Some scepticism is understandable.
Assuming Yellen decides to stand down completely when her Fed Chair term ends in February, four out of the seven positions on the Federal Reserve Board will be vacant. There is also now a vacancy at the New York Fed, given that its President, William Dudley, is retiring early. Remember the NY Fed is particularly involved in the financial market aspects of monetary policy, as well as its President having a permanent vote on interest rates.
As with the Fed Chair, Trump has the choice over who fills the four board member vacancies. Given he is facing mid-term elections in a year's time, it is unlikely he'll want to see clear hawks appointed that could threaten his three percent growth target.
But until Trump has made his decisions and the full 2018 voter mix becomes clear, it is perhaps not surprising that markets continue to treat the Fed's latest "dot diagram" cautiously. Some scepticism is also understandable given the Fed has signalled higher rates before in its dots, without ultimately following through. And on the face of it at least, below-target core inflation and October's weak wage growth number suggests there's no pressing need for a more aggressive shift towards policy tightening in the near term.
The Fed is set to take a hawkish turn.
Then there's the annual rotation of voters at the Fed. This will see arch-dove Neel Kashkari leave, along with Charles Evans (who isn't far behind on the dovish scale). They'll be replaced by the more hawkish John Williams and Loretta Mester. Williams is in favour of three hikes next year, and Mester has even hinted she'd like the Fed to go 'a little stronger' than that.
Until Trump gets new governors onto the Fed board, this means the group of voters will be both smaller and more hawkish, faced with an economy that is performing well and that may have more fuel thrown on the fire with tax cuts.
We're expecting a December rate hike, and these various factors mean there is upside risk to our call for two further rate rises next year. What's more, the long-end of the curve will also have to deal with additional supply from the Fed's balance sheet reduction programme.

Gold advances to multi-week highs above $1280

       The XAU/USD pair rose to its highest level since October 20 at $1285 as the negative market sentiment ramped up the demand for the traditional safe-haven gold. At the moment, the pair is trading at $1284, adding 0.73% on the day.

US stocks under pressure for second straight session
       On Tuesday, market chatter about the tax bill getting watered down in order to receive the needed support from Democrats impacted the market sentiment negatively and weighed on the major equity indexes in the U.S. It seems like investors continue to stay away from risk-sensitive assets on Wednesday as well with the Dow Jones Industrial Average and the S&P 500 both losing 0.15% during the first half of the NA session.

US stocks retreat from record highs

        In the meantime, the US Dollar Index, which failed to hold above the 95 mark on Tuesday, treads water below that level on Wednesday amid a lack of fresh fundamental drivers and allows the pair to preserve its bullish momentum. The DXY is at 94.75 at the moment, down 0.05% on the day. With no macroeconomic data scheduled to be released in the remainder of the day, the inverse correlation between the pair and stock markets are likely to drive the price action.

Technical levels to consider

     With today's upsurge, the CCI indicator on the daily graph rose above the 100 mark, suggesting that the bullish momentum is building up. The immediate hurdle for the pair could be seen at $1291 (Oct. 19 high) ahead of $1300 (psychological level) and $1306 (Oct. 16 high). On the downside, supports could be seen at $1275 (daily low/20-DMA), $1268 (200-DMA) and $1260 (Oct. 6 low).