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Market flat as traders await Jerome Powell’s Speech


US stocks edged lower on Tuesday, regaining upside traction and paring most of their daily losses with traders unwilling to make big bets ahead of Jerome Powell’s speech Wednesday. Jerome Powell is expected to cement expectations the Fed will slow its pace of hikes next month and remind investors that its fight against inflation will run into 2023.

The need for more measured rate rises will also take account of increased two-way economic risks as policy becomes restrictive. Meanwhile, the US central bank is expected to hike rates by an additional 50 basis points when it meets on Dec. 13-14, though the odds of a 75-basis-point increase have risen over the past several weeks and now stand at a 37% probability.

Moreover, market mood improved slightly as Chinese authorities announced multiple measures to ease the strict lockdown in the key areas after witnessing a retreat in the daily Covid infections from a record high. On the Eurozone front, the sentiment remains supportive of the Euro in that the European Central Bank remains committed to raising interest rates to dampen high inflation.

The benchmarks, S&P 500 and Dow Jones Industrial Average both declined lower on Tuesday as the S&P 500 rebounded back slightly with gains in energy and financial firms tempered a slide in big tech. The S&P 500 was down 0.2% on a daily basis and the Dow Jones Industrial Average was little changed with a 0.1% loss for the day. Six out of eleven sectors in the S&P 500 stayed in negative territory as the Information Technology sector and the Utility sector are the worst performings among all groups, losing 0.98% and 0.73%, respectively. The Nasdaq 100 meanwhile dropped the most with a 0.7% loss on Tuesday and the MSCI World index was unchanged for the day.

Main Pairs Movement

The US dollar advanced higher on Tuesday, preserving its upside momentum and extending its daily gains towards the 106.80 area amid a cautious market mood. The 10-year US Treasury yields have accelerated to 3.75% as Fed policymakers see no halt in rate hike culture in the near term, which helped the US Dollar Index (DXY) to print a three-day uptrend despite softer statistics from the United States. This week, the US Nonfarm Payrolls (NFP) is the key event that investors will focus on.

GBP/USD retreated slightly on Tuesday with a 0.06% loss as the cable dropped to a daily low near the 1.1940 mark in the late US trading session amid a cautious market mood. On the UK front, the speech from Bank of England (BOE) Governor Andrew Bailey on Tuesday failed to provide support for the British Pound. Meanwhile, EUR/USD suffered from daily losses and pared the biggest monthly gains since September 2010 amid a stronger US dollar across the board. The pair was down almost 0.10% for the day.

Gold advanced higher with a 0.49% gain for the day after struggling around the $1,750 level ahead of Fed Powell’s speech during the US trading session, as expectations for a less aggressive policy tightening by the Federal Reserve underpinned the precious metal. Meanwhile, WTI Oil advanced sharply with a 1.24% gain for the day.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
CNYManufacturing PMI (Nov)09:3049.0
EURGerman Unemployment Change (Nov)16:5513K
EURCPI (YoY) (Nov)18:0010.4%
USDADP Nonfarm Employment Change (Nov)21:15200K
USDGDP (QoQ) (Q3)21:302.7%
USDJOLTs Job Openings (Oct)23:0010.3M
USDPending Home Sales (MoM) (Oct)23:00-5.0%
USDCrude Oil Inventories23:30-2.758M