Waiting for the Fed

Giles Coghlan LLB, Lth, MA Financial Source

This week was a holding week ahead of the Fed meeting next Wednesday. The recent slew of US data has shown a mixed outlook, but US labour costs showed a large drop this week which will reassure some investors that the Fed may feel at liberty to slow the pace of US rate hikes. However, the problem is that the US picture is far from clear, so the sentiment turned neutral this week among US investors ahead of the Fed next week. In other news, the BoC signalled that it may be at its peak and could stop hiking rates now if inflation does not keep rising.

Other key events from the past week

S&P500: US Labour costs drop, Dec 07: News that US unit labour costs have fallen to 2.4% q/q from 3.1% q/q expected helped lift hopes of slower Fed hikes this week. Major focus remains on US jobs data and this offset some of the angst from the high average hourly earnings indicated by the last NFP print.
CAD: Dovish hike by the BoC, Dec 07: The Bank of Canada hiked by 50bps this week to 4.25%. However, the BoC see slowing growth ahead for the economy and is now considering whether it is necessary to hike rates further.
USD: US Initial Jobless Claims, Dec 08: The last US FOMC minutes recognise the high chance of a US recession. This week’s initial jobless claims showed continuing jobless claims rose to 1671K vs 1600K expected. This is one more piece of data that could cause the Fed to signal slowing rates next week.

Key events for the coming week

USD: Inflation focus, Dec 13: Key focus after a very strong wages print from the last NFP remains on US inflation. A big print & expectations will grow for more aggressive Fed hikes which should support the USD & pressure stocks.
Stronger seasonals approach for silver: Is silver set to soar post the Fed meeting?
USD: Interest Rate decision, Dec 14: How high will the Federal Reserve need to go next year? 4.75%, 5% or even higher above 5.25%? This is what traders and investors will be wanting to know from the Fed this Wednesday.

Learn more about HYCM

Author

Giles Coghlan LLB, Lth, MA

Financial Source

Giles is the chief market analyst for Financial Source. His goal is to help you find simple, high-conviction fundamental trade opportunities. He has regular media presentations being featured in National and International Press.

EUR/USD holds lower ground near 1.1850 ahead of EU/ US data

EUR/USD remains in the negative territory for the fourth successive session, trading around 1.1850 in European trading on Friday. A broadly cautious market environment paired with modest US Dollar demand undermines the pair ahead of the Eurozone GDP second estimate and the critical US CPI data.

GBP/USD keeps losses around 1.3600, awaits US CPI for fresh impetus

GBP/USD holds moderate losses at around 1.3600 in the European session on Friday, though it lacks bearish conviction. The US Dollar remains supported amid softer risk tone and ahead of the US consumer inflation figures due later in the NA session on Friday.

Gold trims intraday gains to $5,000 as US inflation data loom

Gold retreats from the vicinity of the $5,000 psychological mark, though sticks to its modest intraday gains heading into the European session. Traders now look forward to the release of the US consumer inflation figures for more cues about the Fed policy path. The outlook will play a key role in influencing the near-term US Dollar price dynamics and provide some meaningful impetus to the non-yielding bullion.

US CPI data set to show modest inflation cooling as markets price in a more hawkish Fed

The US Bureau of Labor Statistics will publish January’s Consumer Price Index data on Friday, delayed by the brief and partial United States government shutdown. The report is expected to show that inflationary pressures eased modestly but also remained above the Federal Reserve’s 2% target.

A tale of two labour markets: Headline strength masks underlying weakness

Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.

Solana Price Forecast: Mixed market sentiment caps recovery

Solana (SOL) is trading at $79 as of Friday, following a correction of over 9% so far this week. On-chain and derivatives data indicates mixed sentiment among traders, further limiting the chances of a price recovery.