• CL-OIL


  • Cocoa-C


  • View more

Fed expected to raise rates by 75bps


US stocks suffered daily losses on Tuesday, failing to preserve their upside traction and finished lower as the upbeat US data bolstered speculation that Federal Reserve policy could remain aggressively tight despite the threat of a recession. The Fed’s 75 bps rate hike might keep weighing on equity markets in absence of signals favouring a slower lift to rates in December, as an unexpected rebound in US job openings keeps the pressure on the Fed. The US JOLTS Job Openings rise to 10.7 million in September, which came in higher than the market expectation of 10 million and provided firm support to the US dollar.

The US central bank will announce its monetary policy during the US session today and it will be crucial to watch for fresh impulse, as the Fed is widely anticipated to hike rates by 75 bps and send the main rate to 3.75%-4%. In the Eurozone, the European Central Bank (ECB) policymakers said that rates in the Euro area should peak at a level that ensures that inflation returns to the 2% target over the medium term.

The benchmarks, S&P 500 and Dow Jones Industrial Average both retreated lower on Tuesday as Wall Street finished with decent losses amid upbeat data revealing that the United States economy remains in expansionary territory. The S&P 500 was down 0.4% daily and the Dow Jones Industrial Average also dropped lower with a 0.3% loss for the day. Six out of eleven sectors in the S&P 500 stayed in negative territory as the Communication Services sector and the Consumer Discretionary sector are the worst performings among all groups, losing 1.81% and 1.35%, respectively. The Nasdaq 100 dropped the most with a 1.0% loss on Tuesday and the MSCI World index was up 0.2% for the day.

Main Pairs Movement

The US dollar was nearly unchanged on Tuesday, regained upside strength and recovered most of its daily losses around the 111.50 area during the US trading session amid a risk-off market mood. The market’s anxiety ahead of the key Fed meeting and firmer US Treasury yields continued to act as a tailwind for the safe-haven greenback. Market players now gear up for the US Federal Reserve’s interest rate decision.

GBP/USD edged higher on Tuesday with a 0.13% gain after the cable retreated slightly from daily highs but maintained its positive bias above the 1.1480 mark amid renewed US dollar strength. On the UK front, the Bank of England is widely expected to hike their borrowing rates by 75 bps this week. Meanwhile, EUR/USD trimmed its daily gains and refreshed its daily low under the 0.9860 mark amid a stronger US dollar across the board. The pair was down almost 0.05% for the day.

Gold advanced with a 0.88% gain for the day after extending its intra-day rally to the $1,656 area during the European trading session, as the precious metal keep being dragged down by increasing hawkish Fed bets. Meanwhile, WTI Oil advanced higher with a 2.13% gain for the day after the solid recovery in oil prices lost traction near the $88.50 area.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
NZDEmployment Change (QoQ) (Q3)05:450.5%
NZDRBNZ Gov Orr Speaks06:00 
NZDRBNZ Press Conference06:00 
EURGerman Manufacturing PMI (Oct)16:5545.7
EURGerman Unemployment Change (Oct)16:5515K
USDADP Nonfarm Employment Change (Oct)20:15195K
USDCrude Oil Inventories20:300.367M