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Markets maintained a cautious tone ahead of the Fed Policy meeting. The dollar was downbeat following a slow-down in the US inflation print that fell to 7.1% against the 7.3% forecast. Investors are pricing in a Fed pivot and Fed Chair Powell’s speech will guide markets on the fed tightening cycle. UK inflation eased from a 41-year high ahead of the BoE policy meeting. The inflation data remains 5 times higher than the BoE target and investors anticipate further tightening in the near term.
EURNZD surged by +0.55% following negative New Zealand data. The New Zealand Current Account YoY data for Q3 dropped to -29.00B vs -27.82B previous reading, outpacing the -29.60B forecasted. Investors will be closely watching the GDP data due for release later in the day. The positive Spanish CPI print boosted the Euro as the focus shifted to a hawkish ECB day on Thursday afternoon. Bulls are capped by the 1.6650 level and 1.6400 remains a near-term critical support area.
USDJPY plunged -0.69% as traders were cautious ahead of the Fed rate hike. The slow-down in US inflation boosted Fed doves and traders should pay close attention to Fed chair Powell’s commentary for policy guidance. Any confirmation of pivoting could further weaken the dollar in the near term. The Yen advanced on better-than-expected Tankan Manufacturing and Non-Manufacturing data. The pair extended a 2-day drop from 138.00 level towards the 134.00 level. A break below that level could trigger further selling towards the 130.00 level, a 6-month low.
GBPCAD advanced by +0.32% ahead of Thursday’s BoE rate decision day. Traders are pricing in a 50bps hike while a falling demand in Oil markets puts the Canadian dollar under selling pressure. The pair has limited upside gains as UK’s inflation eases more than expected from a 41-year high. Canada will release Key Manufacturing sales data for October and Traders should pay close attention. The pair is rangebound between the 1.6700 support level and the 1.6850 level. A break above the 1.6850 level could create another rally towards the 1.6950 level.
European stocks slipped as investors take a cautionary stance on growth worries ahead of Fed. FTSE100 plunged by -0.20% as bulls struggled to hold on to gains above the 7500 level. The next key level to watch out for is 7450 near-term support. CAC40 slumped by -0.68% to the 6700 level after bulls fail to break above the 6800 near-term resistance. A break below that support could extend the drop to the 6600 level. DAX dropped by -0.41% after a post-inflation spike to the 14650 level, an 8-month high. On the downside, 14200 remains a key support level.
US stock futures were steady as the focus shifted to Fed Chair Powell’s commentary later in the New York session. The S&P500 futures are down by -0.04% after taking a dip from the 4100 resistance. Bulls are currently holding on slightly above the 4000 near-term psychological support and a break below the near-term level could trigger selling pressure in the near term. Nasdaq100 futures were trading at +0.01% and key levels to watch out for are 11800 support and 12200 resistance. DJIA index futures was up by +0.08% and upside gains are capped by the 34800 level while a break below 34000 could cause an extended move to the downside.
Gold holds steadily above the 1800 level before Fed monetary policy announcement. The yellow metal paused its post-inflation rally as Fed is set to hike rates by 50bps. Gold was down -0.15% trading between the 1813 daily resistance and the 1806.00 low. A break above the resistance level could see bulls rally towards the 1850 and 1880 levels.
