Posted at 03 November 2022 / Categories Market Roundups
Market Roundup
• Fed hikes by 75 basis points
• U.S. private payrolls rise more than expected
• Powell says Fed not close to pausing
• Dow down 1.55%, S&P 500 down 2.50%, Nasdaq down 3.36%
• US EIA Weekly Refinery Utilization Rates (WoW) 1.7%,0.5% forecast, -0.6% previous
• US Cushing Crude Oil Inventories 1.267M, 0.667M previous
• US Distillate Fuel Production 0.139M ,-0.045M previous
• US EIA Weekly Distillates Stocks 0.427M, -0.560M forecast,0.170M previous
• US Crude Oil Inventories-3.115M, 0.367M forecast, 2.588M previous
• US Fed Interest Rate Decision 4.00%, 4.00% forecast, 3.25% previous
Looking Ahead - Economic Data (GMT )
•01:15 China Oct Caixin Services PMI 49.2 forecast, 49.3 previous
Looking Ahead - Events, Other Releases (GMT)
•No data ahead
Currency Summaries
EUR/USD The euro dipped on Wednesday after Federal Reserve Chair Jerome Powell signalled U.S. rates would likely rise further than expected, disappointing traders’ hopes for a change in tone, and shifting the focus to Friday’s jobs data. The Fed raised its benchmark funds rate by 75 basis points to 3.75-4% as widely expected. The dollar initially fell on hints in the Fed’s statement of smaller hikes ahead, but it was bid after Powell’s hawkish stance about the trajectory rates. The euro initially rose against the dollar but later turned lower, down 0.5% at $0.9825. Immediate resistance can be seen at 0.9875(5DMA), an upside break can trigger rise towards 0.9949 (38.2%fib).On the downside, immediate support is seen at 0.9800 (23.6%fib), a break below could take the pair towards 0.9786 (Oct 24th low).
GBP/USD: Sterling declined against the dollar on Wednesday as the U.S. Federal Reserve delivered a three-quarters of a percentage point interest rate hike and Fed Chairman Jerome Powell said it was too soon to speculate over a pause in rate hikes. The pair initially jumped after the U.S. central bank announced the rate hike as expected, and signaled that future increases in borrowing costs could be made in smaller steps.But markets sharply reversed course after Powell, in remarks during a news conference , said "it is very premature to be thinking about pausing" on the effort to lift the federal funds target rate . Immediate resistance can be seen at 1.1435 (38.2%fib), an upside break can trigger rise towards 1.1581 (Nov 2nd high).On the downside, immediate support is seen at 1.1329(21DMA), a break below could take the pair towards 1.1251(50%fib).
USD/CAD: The Canadian dollar weakened against its U.S. counterpart on Wednesday as investors braced for further tightening from the Federal Reserve following the central bank’s fourth straight interest rate hike of 75 basis points. The pair reversed course and turned sharply higher as Fed Chair Jerome Powell said it was “very premature” to be thinking about pausing rate hikes, with the comments offsetting a signal in the central bank’s policy statement that smaller rate hikes may be on the horizon.The loonie was trading 0.4% lower at 1.3702 to the greenback , after moving in a range of 1.3550 to 1.3705. Immediate resistance can be seen at 1.3718 (23.6%fib), an upside break can trigger rise towards 1.3852 (Oct 21st high).On the downside, immediate support is seen at 1.3654(5DMA), a break below could take the pair towards 1.3565 (38.2%fib).
USD/JPY: The dollar dipped against the yen on Wednesday in volatile trading after Federal Reserve Chair Jerome Powell struck a still hawkish tone. The Fed, as markets had expected, raised its key lending rate by 75 basis points for the fourth straight time after a two-day meeting of policy-makers. Japan’s yen was notably firm in the face of dollar gains, and has held at 147.90 per dollar, prompting speculation of possible help from official intervention.Japan spent a record $42.8 billion propping up the yen last month via a series of unannounced yen purchases, on top of almost $20 billion spent in September. Japanese markets were closed for a holiday on Thursday. Strong resistance can be seen at 147.74 (5DMA), an upside break can trigger rise towards 149.85 (23.6%fib).On the downside, immediate support is seen at 146.78(38.2%fib), a break below could take the pair towards 145.26(Oct 28th low).
Equities Recap
European shares gave up early gains and closed lower on Wednesday as investors exercised some caution ahead of the U.S. Federal Reserve's interest rate hike decision later in the day.
The UK's benchmark FTSE 100 closed down by 0.44 percent, Germany's Dax ended down by 0.43 percent, and France’s CAC finished the down by 0.74 percent.
U.S. stocks ended sharply lower on Wednesday, as comments from Fed Chair Jerome Powell shattered initial optimism over a Fed policy statement that raised interest rates by 75 basis points but signaled that smaller rate hikes may be on the horizon.
Dow Jones closed down by 0.27 percent, S&P 500 ended down 0.55 percent, Nasdaq finished the day down by 0.90 percent.
Treasuries Recap
U.S. Treasury yields rose in volatile trading after a brief fall on Wednesday after Federal Reserve Chair Jerome Powell struck a still hawkish tone in his comments, cautioning against prematurely discussing a pause in hiking rates in the face of persistently high inflation.
U.S. 10-year yields were 4 bps higher on the day at 4.09% after their initial steep decline. U.S. two-year yields, which reflect rate expectations, were up 6.6 bps at 4.603%.
Commodities Recap
Gold turned negative on Federal Reserve Chair Jerome Powell’s remarks on Wednesday that it was premature to discuss pausing rate hikes, after prices jumped over 1% as the U.S. central bank signalled future interest rate increases could be made smaller.
Spot gold fell 0.5% to $1,640.05 per ounce by 3:45 p.m. EDT (1945 GMT). U.S. gold futures settled up 0.02% at $1,650 ahead of the Fed decision.
Oil prices rose on Wednesday, gaining ground even as other risk assets dropped following the Federal Reserve's fourth interest rate hike of the year.
Brent crude settled up $1.51, or 1.6%, to $96.16 while U.S. West Texas Intermediate (WTI) crude settled up $1.63, or 1.8%, to $90 on the nose. The gains did ebb after settlement.