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Market awaits FOMC meeting and US Non-Farm data release


The Nasdaq 100, tumbled almost 2%. The S&P 500 and the Dow Jones slashed 1.30% and 0.77% of their value as traders prepared for the US Federal Reserve Open Market Committee (FOMC) decision on Wednesday. Hence, a busy US economic calendar was one of the main reasons for the US Dollar to appreciate against most G8 currencies.

Reflection of the aforementioned is US Treasury bond yields, precisely the US 10-year benchmark note rate, finished Monday with gains of three and a half basis points. Up at 3.542%, underpinned the greenback.

Tech stocks pulled the major indexes lower ahead of the Fed’s announcement. The central bank is expected to raise interest rates another quarter of a percentage point on Wednesday, and investors are hoping to get a hint of where the Fed is headed this year.

The Federal Reserve kicks off its two-day meeting on Tuesday, but with the prospect of a downshift to a 25-basis-point rate hike almost priced in for Wednesday, investors are expecting Fed chairman Jerome Powell to signal more hikes ahead and push back against expectations that the Fed could cut rates later this year. (Reference from Investing. com)

Main Pairs Movement

DXY a measure of the greenback’s value against a basket of six currencies continues to recover and prints gains for three straight days, finishing Monday’s session with gains of 0.31% amidst risk aversion. At the time of writing, the DXY exchanges hand at 102.242.

EUR/USD seesaws around 1.0850 as bears take a breather after breaking important support. With this, the major currency pair confirms its place on the seller’s radar even if it probes the three-day downtrend with its latest inaction. During Monday’s trading course, the closed price dropped 0.16% on the daily chart.

GBPUSD dropped around 0.3% throughout Monday’s trading, price closed at $1.2350. Cable holds lower grounds after a two-day downtrend, making rounds to 1.2350 during early Tuesday morning in Asia.

XAUUSD’s price lost 0.23% throughout Monday’s trading. The yellow metal has drifted lower for a third day and is testing structure as we head towards key events this week. The bull could emerge ahead of the Feds.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
CNYManufacturing PMI (Jan)09:3049.8
EURGerman Unemployment Change (Jan)16:555K
EURGerman CPI (YoY) (Jan)21:009.2%
CADGDP (MoM) (Nov)21:300.1%
USDCB Consumer Confidence (Jan)23:00109.0