US Stocks Rally After Fed Holds Rates – Nasdaq Up 1.4%
US stock indices rallied strongly in overnight trading after the Fed kept rates on hold and predicted 50 basis points of cuts before the end of the year. All three major indices pushed higher following the announcement, with the Dow rising 0.92%, the S&P 1.08%, and the Nasdaq jumping 1.41%. US Treasury yields fell as traders priced in the fresh dot plot, with the 2-year yield down 6.8 basis points to 3.972% and the 10-year falling 4 basis points to 4.243%. However, the dollar edged slightly higher against most major currencies, with the exception of the yen. Oil prices rose after the Fed’s announcement, with Brent up 0.5% to $70.91 per barrel and WTI increasing 0.39% to $67.16 per barrel. Meanwhile, gold continued its upward momentum, gaining another 0.49% on the day to reach a new record high, closing at $3,046.64.
Dollar Consolidating at Annual Lows
The dollar has spent the past few trading days consolidating around annual lows, and FX traders are now evaluating its next move. Many were looking to the Federal Reserve’s latest meeting for a catalyst, but the central bank delivered what was largely expected overnight, with a measured update following its widely anticipated rate hold. The dollar index has found support on multiple occasions in recent days around the 103.20 level, and a break lower could see it challenge support just below 102.00. Much will depend on the euro— which comprises 57% of the basket— and whether it breaks through long-term resistance near 1.1000 or retreats into recent ranges. Whatever unfolds next, most FX traders do not expect the DXY or the euro to remain at current levels for long.
Huge Trading Day Ahead for Markets
It is a significant day for traders, with key data releases and central bank updates spanning all three major trading sessions. The day has already seen New Zealand GDP figures surpass expectations in the Asian session, and focus will soon shift across the Tasman for Australian employment data later this morning, followed swiftly by Chinese Loan Prime Rate updates from the PBOC.
The European session brings a double dose of UK data, with employment figures released early in the session, followed later by the Bank of England’s latest rate decision and associated updates. In between, attention will turn to Switzerland for the Swiss National Bank’s rate decision, where another 25-basis point cut is expected.
The New York session will feature the usual Weekly Unemployment Claims data alongside the Philly Fed Manufacturing Index before the day concludes with a speech from Bank of Canada Governor Tiff Macklem.
