All Eyes on The Fed
Following yesterday’s downside surprise in US inflation, traders now eagerly await the FOMC later today. Initial excitement in risk markets was quickly tempered yesterday suggesting that plenty of caution still remains with regard to the Fed’s outlook. Fed chair Powell has been keen to stress a willingness to avoid abandoning rate hikes too early, something we’ve heard from several Fed members recently. With that in mind, the Fed seems likely to try and strike a more balanced tone, acknowledging a welcomed downturn in inflation but the need to keep hiking rates into next year in order to bring prices down sustainably.
US Recession Risks
US recession risks will also be in focus today and might be the area where we see any dovish errors, if there are to be any. Those calling for the Fed to pause, or further reduce, US rate hikes argue that the economy is being harshly impacted. If the Fed is seen dwelling on this issue today, USD might well come under heavier selling as bears interpret that as a precursor to pausing rates earlier in 2023. However, if the Fed sticks to its guns, reaffirming the need to push on with rates, albeit at a reduced pace, this should at least stem the USD decline for now and keep equities upside tempered.
Technical Views
Nasdaq
The index is currently grinding higher within a corrective bull channel, set within the larger bearish channel. 12269.1 is the key level to watch for now with a break higher here confirming the break of the bear channel and turning focus to 12927.3 next. To the downside, 11240.8 is the next support to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.