HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%
MultiBank Group information and reviews
MultiBank Group
84%

Investors lock gaze on Fed minutes


3 January 2024 Written by Raffi Boyadjian  XM Investment Analyst Raffi Boyadjian

The US dollar began the year on a strong footing on Tuesday, accelerating its advance through the day and even recording gains of more than 1% against some currencies. With no clear event or catalyst to fuel the greenback, the advance may have been the result of traders considering the retreat during the end of 2023 as overdone, and/or reevaluating their Fed rate cut bets. Indeed, alongside the US dollar, Treasury yields also rose, with the 10-year benchmark rate briefly returning above 4% yesterday for the first time since December 14.

The total number of basis points worth of rate reductions expected by the market for the whole year was slightly lowered to 150 from 155, while the probability of a March quarter-point cut now rests at around 85% compared to 95% early on Tuesday.

Will the Fed minutes shake the market’s implied rate path?

Today, dollar traders are likely to lock their gaze on the minutes of the December FOMC gathering for more clues regarding the Committee’s future course of action. Back then, policymakers revised down their dot plot to suggest that interest rates will end 2024 at 4.6%, 50bps lower than September’s 5.1%. On top of that, at the press conference, Fed Chair Powell sounded more dovish than expected, saying that rate increases are not the base case anymore and that the question now is “when will it become appropriate to begin dialing back?”

With that in mind, investors may dig into the minutes to see if they can get any clues regarding the timing of a potential first reduction. But even if they don’t find anything relating to the timing, should rate cuts prove to be a main topic in officials’ discussions, traders may be tempted to start selling the dollar again as they ramp up their cut bets.

That said, their view could be affected ahead of the minutes as the ISM manufacturing PMI for December and the JOLTS job openings for November are scheduled to be released. The former is expected to have risen to 47.1 from 46.7, with an improvement being corroborated by a small rise in the preliminary S&P Global manufacturing PMI. Job openings are also expected to have increased, perhaps adding a glimpse of hope that Friday’s NFP data for December may also come somewhat brighter than expected. Such numbers may allow some more dollar buying heading into the minutes.

Nasdaq slides more than 1% on tech tumble

On Wall Street, the Dow Jones Industrial Average managed to record fractional gains on the first trading day of the year, but both the S&P 500 and the Nasdaq slid, with the latter losing 1.63% as tech stocks suffered. The weak start follows a year where all three indices locked double digit gains due to artificial intelligence euphoria, slowing inflation and aggressive rate-cut expectations. However, with the rally appearing overstretched, some investors and managers may have decided to lock some profits or hedge their positions ahead of this week’s risk events. Although multiples have been long suggesting stretched valuations, participants may have accelerated their stock buying in December due to their calculations suggesting that the expensive prices are fairly reflecting present values of future growth opportunities, thereby triggering a FOMO (fear of missing out) response.

This week, equity traders may also turn their attention to data and events regarding Fed policy as anything corroborating or adding to the market’s narrative of aggressive reductions this year could result in elevated present values for high-growth firms that are usually valued by discounting expected free cash flows for the quarters and years ahead.

Oil slips as risk aversion overshadows Red Sea tensions

In the energy sphere, oil prices reversed their early gains and closed Tuesday in the red. Perhaps the crisis in the Red Sea was overshadowed by the broader risk-averse environment. Moving forward, even if the tensions in the Middle East ratchet up, any related advances are likely to stay limited and short-lived due to record crude production in the US and subdued global demand.

What’s more, with the scale of the cuts that the OPEC+ group has announced, it may be difficult for the group to cut more this year, which means limited ability for the alliance to provide a helping hand to prices.

by XM.com

#source


RELATED

Dollar loses ground as an eventful week starts

Another data-rich and eventful week begins, as the market adjusts to changes in the geopolitical scene. The fall of the Assad regime in Syria is altering the dynamics in the Middle East, uniting former antagonists like Turkey and Israel.

9 Dec 2024

Dollar is under pressure, eyes US data for a recovery

With the US dollar underperforming across the board during yesterday's session and US stock indices failing to make new all-time highs, the focus turns to the US labour market report.

6 Dec 2024

Fed may cut rates in December, French politics in limbo

The US dollar traded mixed against its major peers yesterday, but it seems to be on the front foot against most of them today.

4 Dec 2024

Dollar starts off the month on the right foot

With US market participants returning rejuvenated from the long weekend, an important week commences, essentially marking the start of a period up to December 19, when the last central bank meetings for 2024 will be held.

2 Dec 2024

Dollar pulls back ahead of key inflation data

Dollar traders lock gaze on PCE inflation numbers. Inflation stickiness could increase Fed pause chances. Yen strengthens on safe-haven demand.

27 Nov 2024

Dollar rebounds, loonie tumbles on Trump tariff threats

The US dollar recharged today after US President-elect Donald Trump said that he will impose a 25% tariff on all imports from Canada and Mexico and that he will charge an additional 10% on Chinese goods.

26 Nov 2024

Geopolitics and Trump's cabinet selections guide market sentiment

Possible ceasefire in Lebanon, gold dives. A shortened week in the US due to Thanksgiving celebrations. Dollar loses ground against euro and yen; bitcoin fails at $100k.

25 Nov 2024

Geopolitics dictates market sentiment, but dollar fails to benefit

The markets reacted negatively to the perceived escalation and the aggressive rhetoric from both sides, with gold recording its best two-day rally since early March, when the markets were mentally preparing for the Fed rate easing cycle.

20 Nov 2024

Stocks cautiously edge up amid geopolitical and inflation risks

Equity markets were in a perky mood on Tuesday as a recovery on Wall Street helped Asian stock markets advance, although European shares were more mixed.

19 Nov 2024

US CPI report could reverse the post-election euphoria

President-elect Trump is gradually assembling his cabinet, with the market anticipating the most crucial appointment, the Treasury Secretary.

13 Nov 2024

Positive sentiment lingers despite mixed newsflow

The markets continue to digest Trump’s victory and last Thursday's Fed dovish rate cut, with most market participants now speculating on the course of action of the new administration as the president-elect is assembling his cabinet.

11 Nov 2024

Dollar pauses rally ahead of Fed, BoE meets as well

After hitting a four-month high on the heels of Donald Trump's return to the White House, the dollar is pulling back today, as traders may have decided to lock some profits after the sharp rally and ahead of the Fed decision later today.

7 Nov 2024

Dollar and stocks surge on Trump victory bets

The dollar skyrocketed during the Asian session today, and it appears to be headed for its biggest one-day gain since March 2020.

6 Nov 2024

Volatility returns with a vengeance ahead of key US events

The recent, relatively quiet, market sessions were interrupted yesterday, with a strong correction recorded in both equities and gold.

1 Nov 2024

Dollar maintains gains amidst fragile market conditions

Market participants are gradually preparing for an action-packed week, with Friday’s US jobs report being the key event, that also includes some major earnings releases. Alphabet will report today, followed by Microsoft and Meta tomorrow, and Amazon and Apple on Thursday.

29 Oct 2024

Tensions remain high in equities

The next Fed meeting will be held two days after the election date and, assuming an eventless election process occurs, Chairman Powell et al will evaluate the progress made since the September aggressive rate cut.

25 Oct 2024

Demand for safe assets lingers

The US dollar continues to enjoy strong demand, outperforming its main counterparts. In particular, euro/dollar is trading at the lowest level since early August, and dollar/yen is hovering a tad below the 151 area.

22 Oct 2024

Strong US data keep the dollar in demand

The euro suffered another weak session yesterday, with the euro/dollar pair dropping below the key 200-day simple moving average and euro/pound fully erasing the recent UK CPI-induced correction.

18 Oct 2024

US dollar and stock rally continues

Both the US dollar and main US equity indices enjoyed another strong session yesterday.

15 Oct 2024

Dollar baffled after mixed data and Fedspeak

China might have played a key role in gold’s performance, but, at the same time, it offers little assistance to the oil rally as the market remains very pessimistic about the impact of the new set of Chinese support measures.

11 Oct 2024


Editors' Picks

Regulation Matters: Why a Licensed Forex Broker Should Be Your Top Priority

Choosing a regulated broker is not just a matter of preference; it is a necessity for safeguarding your investments and ensuring that you trade in a fair and secure environment.

Automating Success: The Benefits and Risks of Using Forex Expert Advisors

This article explores the benefits and risks associated with using Forex Expert Advisors, providing insights into how traders can maximize their potential while mitigating potential downsides.

Best Forex Brokers 2024

By prioritizing factors such as overall rating, regulatory compliance, trading conditions and platform reliability traders can make an informed decision that aligns with their trading needs and aspirations, setting the stage for a potentially prosperous trading journey.

The Top Forex Expert Advisors 2024: Performance, Strategy, and Reliability Review

An annual roundup reviewing the most successful Forex Expert Advisors (EAs) based on their performance, strategies employed, reliability, and user feedback. This piece would provide insights into which EAs have been market leaders and why.

The Evolution of Forex Expert Advisors: Navigating the Path of Technological Revolution

The concept of automated trading has been around for decades, but the accessibility and sophistication of Forex EAs have seen significant advancements in the past few years. Initially, automated trading systems were rudimentary, focusing on simple indicators like moving averages.

Best Forex EAs 2024 – Forex Expert Advisors Rating

Expert Advisors (EAs) Rating features high-quality Free and paid Forex EA most popular on the market today.

XM information and reviews
XM
82%
FP Markets information and reviews
FP Markets
81%
FXTM information and reviews
FXTM
80%
AMarkets information and reviews
AMarkets
79%
Octa information and reviews
Octa
79%
BlackBull information and reviews
BlackBull
78%

© 2006-2024 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.