Thursday Market Snapshot
|Asset||Current Value||Daily Change|
|WTI Crude Oil||61.22||-0.63%|
Although the Federal Reserve is expected to keep its benchmark rates unchanged today following three tightening steps so far this year, financial markets are virtually unchanged across assets classes before the central bank rate decision and monetary statement.
Risk assets celebrated the end of the pre-election uncertainty yesterday, despite the fact that the midterms resulted in a legislative gridlock, with especially US stocks gaining ground and recovering another part of the October selloff.
The USD/JPY has been very strong in recent days amid the risk rally and despite the broad Dollar pullback, and it’s now very close to its early October high. The Greenback’s strength compared to the most important safe-haven currency underlines the extent of the bullish forces behind the Dollar’s rally, as it has been able to gain ground against all of the majors despite the different market environments.
While currently, the USD is well below its highs against the some of the China-related currencies, thanks to the trade-related optimism, the Dollar bull is well and alive in our opinion. Until a marked slowdown the US economy, we could see further highs in the Dollar index, in spite of the cyclical corrections against some of its peers.
VIX Plunges Below 17, but Oil Fails To Join Rally
The US Volatility Index (VIX) fell below the crucial 17 level that we pointed out this weekend, and that also points further gains in US stocks for the coming days, but we still expect the broader downtrend to resume.
Rallies still should be treated as selling opportunities, especially as the relatively weaker markets in Europe and Asia are still not showing signs of strong recovery, even as the major US indices are once again outperforming their global peers.
Equities are also having a slow session so far, and while that’s not a surprise on a Fed-day it also solidifies the recent bounce, especially as Treasuries are signaling a slightly hawkish Fed statement, with especially the short end of the yield curve pushing higher.
The swift rise in yields contributed to the decline in stocks, but now investors seemingly got used to the new reality of rates, and the broader bearish trend will likely resume on another catalyst.
Commodities are trading with a bearish bias ahead of the Fed, with especially crude oil looking weak again, and yesterday’s huge US inventory build just made matters worse for energy bulls. The WTI contract is still holding up above the $60 level, but the spike below that support, that we speculated on during the weekend is still very likely before a meaningful rally, despite the deeply oversold momentum readings.
Gold is hovering near the middle of its consolidation range in the meantime, with the $1225 level acting as a price magnet, while copper continued its bearish drift after the failed break-out attempt of its broad correction pattern. As usual we expect a very active and hectic post-Fed period, and day-traders should be aware of the stop runs and false moves that often happen in the volatile environment.
Major Stock Indices
S&P 500 Futures, 4-Hour Chart Analysis
Dow 30 Futures, 4-Hour Chart Analysis
DAX 30 Index CFD, 4-Hour Chart Analysis
FTSE 100 Index CFD, 4-Hour Chart Analysis
EuroStoxx50 Index CFD, 4-Hour Chart Analysis
Nikkei 225 Futures, 4-Hour Chart Analysis
Shanghai Composite Index CFD, 4-Hour Chart Analysis
EEM (Emerging Markets ETF), 4-Hour Chart Analysis
EUR/USD, 4-Hour Chart Analysis
GBP/USD, 4-Hour Chart Analysis
EUR/GBP, 4-Hour Chart Analysis
AUD/USD, 4-Hour Chart Analysis
Gold Futures, 4-Hour Chart Analysis
Copper Futures, 4-Hour Chart Analysis
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