Spreadex Market Update
FOMC In Focus – Traders Brace For Fireworks
FOMC day is finally upon us, and traders are bracing themselves for fireworks. While the Fed is not likely to deviate from the anticipated 75bps worth of tightening expected, the bank’s outlook and guidance will be closely scrutinised. Recently, there has been growing speculation that the Fed might signal a slowing of rate increases from December, in line with what we’ve seen from other central banks such as the RBA and BOC. This perspective has
been the main cause of the USD correction we’ve seen from YTD highs.
If the Fed is seen cooling its outlook further rate increases, likely out of concern for the economy and housing market, this would lean heavily on USD near-term. However, given that the Fed has been resolute in its commitment to defeating inflation and with the vast majority of Fed members remaining hawkish in their commentary ahead of the meeting, further hawkish guidance still looks to be the base case scenario here which should see
fresh buying in USD.
Key Factors for Today
- USD continues to fluctuate ahead of FOMC – traders brace for December outlook
- Mixed action in equities with US stocks losing ground
- JPY leads in FX – EUR & GBP weaken
- Metals and oil higher ahead of FOMC
Coming Up
- USD US ADP Employment change
- USD November FOMC
- NZD RBNZ’s Orr speaks
US Stocks Weaken Ahead of FOMC
Equities prices have seen mixed action so far this week. US stock markets came under pressure yesterday as USD reversed initial weakness and traded higher on the back of better-than-expected ISM manufacturing data, paving the way for a more hawkish Fed outcome today. However, stocks in Europe and Asia have remained well-bid as bond yields continue to soften. The FTSE in particular has had a great week, rallying almost 3% on the back of a softer GBP.
UBER Shares Spike & Drop on Mixed Earnings
US earnings season rolls on and the big story yesterday was the almost 20% spike in UBER shares as the company posted larger-than-forecast revenues of $8.34 billion vs $810 billion expected. However, the gains were short-lived as traders reacted to weaker-than-forecast EPS of -$0.61 vs -$0.17. UBER noted that active users had jumped to fresh highs of 124 million though noted that, while there had been a huge recovery in ride-hailing, bookings were still a little below pre-pandemic levels.
JPY Leads in FX – EUR & GBP Soften
In FX, a softer tone to equities markets has seen JPY finding favour for the first time in a while. JPY has been particularly strong against EUR and GBP so far today which have both come under fresh selling pressure ahead of the FOMC. The prospect of a further 75bps hike from the Fed looks likely to keep USD well seated. Ahead of the main event we’ll also get the latest US ADP employment data which will be taken as a rough gauge ahead of Friday’s jobs data.
Metals & Oil Higher Ahead of FOMC
In the metals and commodities space, both gold and silver are trading higher again today. While we saw some volatility yesterday amidst the bullish reversal in USD, both metals are retaining demand today ahead of the FOMC. Crude prices have been firmer again today also with futures now testing last week’s highs. The latest EIA report is due today and should help support crude prices further if the expected -0.2 million barrel drawdown is confirmed.
It's easy to open an account
- Fill in our simple online application form
- Fund your account
- Start trading the global markets instantly!
SEARCH FOR AN ARTICLE:
Enter a keyword and search for all relevant articlesMARKET ANALYSIS
RECENT POSTS
DISCLAIMER
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investors lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. For professional clients, spread betting and CFD trading can also result in losses larger than your initial stake or deposit.
Spreadex Ltd is authorised and regulated by the Financial Conduct Authority, provides an execution only service and does not provide advice in any way. Nothing within this update should be deemed to constitute the provision of investment advice, recommendations, any other professional advice in any way, or a record of our trading prices. This update does not constitute or form part of an offer of, or solicitation for a transaction in any financial instrument, nor shall it or the fact of its distribution form the basis of, or be relied on in connection with, any contract therefore. Any persons placing trades based on their interpretation of the comments or information within this update does so entirely at their own risk.
No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained within this update by Spreadex Ltd or any of its employees and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions. As such, no reliance may be placed for any purpose on the information and opinions contained within this update.
The information contained within this update is the intellectual property of Spreadex Ltd and is protected by UK and International copyright laws. All rights reserved. Users may however freely download, distribute and reproduce extracts of the contents, subject always to accrediting Spreadex Ltd as the source and providing a hyperlink to www.spreadex.com.
