Spreadex Market Update
FOMC Minutes Show Support For Larger Hikes Still There
The FOMC minutes last night did little to dissuade markets from the view that the Fed is likely to press ahead further with tightening this year. The minutes showed that several members expressed support for a larger hike in January before settling on a smaller 25bps rise. With inflation having jumped again since that meeting, traders are now anticipating that support for a larger hike will have grown – pointing to the risk of a half-point increase in March.
However, in sum, the minutes were perhaps not as hawkish as many feared and with yields softening a little late into the US session, equities were seen clawing back from the day’s lows. The focus now will revert back to incoming US data. Today, advance US GDP q/q will be the main focus, expected at 2.9% from 2.9% prior.
Key Factors for Today
- USD a little softer following FOMC minutes – Fed seen pushing ahead with further hikes, support for larger hikes still there
- Equities bounced back yesterday as yields softened – perhaps markets felt minutes not as hawkish as expected
- Alibaba earnings due today
- AUD leads in FX amidst risk recovery – CHF falls
- Metals and oil heavy following fresh sales
Coming Up
- USD – Advanced q/q US GDP
- Oil – EIA Inventories
- EUR – Final eurozone CPI
FTSE Fails to Bounce Back
Equities markets were mostly seen rebounding off the lows yesterday. Softening yields were largely behind the move though, any upside strength in today’s GDP data holds the potential to drive equities lower again on any fresh USD rally. Despite the broader trend of markets bouncing off lows, the FTSE remained under pressure yesterday and is back under offer today as a number of big names on the index go ex-dividend including AstraZeneca, Barclays and GSK.
Alibaba Earnings Due Today
In the US earnings season landscape, shares in ETSY bounced back yesterday as despite EPS coming in below forecasts, revenues were seen beating projections. Today, we have a slew of big names reporting with Alibaba the key tech name to watch along with Moderna which also reports Q4 earnings.
Risk FX Rebounds Amidst Mixed Open
Bit of a mixed start in FX this morning. A softer tone to USD so far, following yesterday’s gains has seen AUD rebounding over the European open on Thursday. Likewise, CAD and NZD have seen better demand also linked to the more positive risk-backdrop on the back of yesterday’s equities movements. CHF has been the worst performer so far today with gains in EUR and JPY limiting demand for the currency. Outside of US GDP, final eurozone CPI will be the key data print, with the headline reading expected to tick up to 8.6% from 8.5% prior.
Metals & Oil Look Heavy Following Fresh Selling
In the metals and commodities space, both gold and silver are seeing a muted open on Thursday. On the back of yesterday’s fresh selling, both metals are vulnerable to further losses near-term should today’s data see USD trading higher. Crude prices remain heavy today following further selling yesterday amidst a fresh uptick in USD. Today, traders receive the latest EIA inventories update, forecast at a surplus of 2.9 million barrels.
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