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Fed promised to fight inflation


US stocks declined lower on Thursday, continuing their downside momentum and dropping for a second day as Federal Reserve officials are likely to remain persistent in their fight against inflation and warned of more pain to come. Fed speakers in recent days have emphasized that they need to go further to extinguish price pressures.

Moreover, the renewed concerns related to the Ukraine-Russia war and the worsening coronavirus outbreak in China both weighed on investors’ moods. The country reports increased cases daily, which raised potential supply-chain issues for the global economy.

On the economic data, the US Weekly Initial Jobless Claims declined to 222K, which came in slightly better than the market expectation of 225K.

On the Eurozone side, the negative sentiment could be due to recent events in Polonia, as NATO believes Russia was responsible for the missile strike that targeted a Polish city, despite the missile presumably originating from Ukraine’s defence.

The benchmarks, S&P 500 and Dow Jones Industrial Average both edged lower on Thursday as the S&P 500 declined for the second straight session amid the souring market mood. The S&P 500 was down 0.3% daily and the Dow Jones Industrial Average was little changed with a 0.1% loss for the day. Eight out of eleven sectors in the S&P 500 stayed in negative territory as the Utility sector and the Consumer Discretionary sector are the worst performing among all groups, losing 1.79% and 1.27%, respectively. The Nasdaq 100 meanwhile retreated slightly with a 0.2% loss on Thursday and the MSCI World index was down 0.8% for the day.

Main Pairs Movement

The US dollar advanced higher on Thursday, regaining some upside traction and recovering some of the ground lost earlier in the week in the late US trading session as the market mood remained sour. Despite the latest second-tier data from the United States coming in mixed, the Federal Reserve policymakers’ resistance to reiterate the statements favouring the 50 bps rate hike in December helped the US Dollar to find demand.

GBP/USD declined lower on Thursday with a 0.42% loss as the cable witnessed fresh selling and retreated towards the 1.1780 mark after the UK budget and US data. On the UK front, the UK government presented a fiscal plan, which presented an increase in taxes of £55 billion and spending cuts to restore the UK’s fiscal reputation. Meanwhile, EUR/USD retreated slightly from a daily high and finished the day in the 1.0360 price zone amid a stronger US dollar across the board. The pair was down almost 0.32% for the day.

Gold declined lower with a 0.76% loss for the day after extending the intra-day slide towards a daily low around the $1758 area during the US trading session, as Federal Reserve talks, Russia-Ukraine tussles and Covid woes both favoured the greenback. Meanwhile, WTI Oil dropped sharply with a 4.62% loss for the day.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
GBPRetail Sales (MoM) (Oct)15:000.3%
EURECB President Lagarde Speaks16:30 
USDExisting Home Sales (Oct)23:004.38M