Stocks Mixed Ahead of Fed – Nasdaq down 0.76%
US stock markets had a mixed day ahead of today’s crucial Federal Reserve update as the Dow gained ground whilst tech stocks took a bit of a hit. The Dow finished up 0.36%, the S&P dropped just 0.06% and the Nasdaq lost 0.76% as shares in both Alphabet and Microsoft dropped after they released their quarterly earnings reports. The first Jobs numbers of the week, the JOLTS Job Openings data reported an unexpected rise in job openings, the dollar remained in quiet ranges against most of the majors and US treasury yields drifted lower, the 10-year losing 3.2 basis and the 2-year dropping 1.4 to 4.31%. Oil prices rose once again as geo-political concerns continued to weigh on sentiment, WTI gaining 1.35% to trade up to $77.65 a barrel and Gold closed back around the $2,036 level having had a volatile session which saw it spike to levels above $2,048 earlier in the day.
FX Traders Focus on the Fed Today
There are still nearly three full trading sessions for traders to negotiate before we hear the latest rate update from the Federal Reserve today but already FX traders are looking at longer term trades for the next few sessions once we have some clearer advice from Jerome Powell and his team. Whilst there has still been a fair amount of volatility in other markets, the FX has been strangely quiet over the last few days trading. The dollar had taken a pounding in the last few weeks of 2023 after the last Fed meeting indicated rate cuts were coming thick and fast in 2024 but the change in that narrative has brought back bit of strength for the greenback. At one point, the market had fully priced in a 25bps rate cut by the March meeting, but those odds have now retreated to around 30% on the swaps market and FX traders are now looking for this stance to be confirmed later today, if this is the case then expect the dollar to take another step higher as expected interest rate differentials adjust accordingly.
Massive Day Ahead for Investors
It is a huge day ahead for investors today with a raft of data releases across the globe before we finally hear from the Federal Reserve Bank. There is key inflation data out early in the APAC day in Australia with the CPI data being released, this is followed an hour later by Chinese PMI numbers with investors once again hoping for some positive news from the beleaguered economy. On the London open, the focus will move to Germany for the crucial CPI data release before the New York day begins and we are hit by multiple updates. There are two separate US jobs numbers out, the ADP non-Farms and the Employment Cost index as well as Canadian GDP data and then later in the day, the big event as we hear the rate update from the FOMC as well as the statement and press conference.
