- The FOMC rose rates by the as expected 75bp (4th consecutive hike to 14-year highs) and suggested lower rate hikes – “time to reassess pace of rate hikes is coming” – (50bp into Dec and 25bp into Q123) but perhaps for longer, “very premature to think about pausing.” Also suggesting a higher terminal rate, (5.1%) and then Powell re-iterated that “we have some ways to go until inflation is defeated.” USD and Stocks whipsawed wildly on the two-edged communication. Also this week jobs market remains HOT, JOLTS were better & ADP at 239K was 23% over expectations – so today’s claims and tomorrow’s NFP will be key.
- USDIndex – Dived to 110.25 on initial headline, but trades 1.8% higher now at 112.23. US Stocks rallied and then tanked lower into close (NASDAQ -3.36% underperformed again). 10-yr yields flirted under 4.0% but hold at 4.06%, and the 2-10yr yield curve remains the most inverted (and therefore most recessionary in 22 years). Asian markets weaker and EUR futures flat.
- Overnight – AUD Services PMIs better than expected (49.3) & Chinese Service PMIs worse than expected (48.4) both still in contraction.
- EUR – from a spike to 0.9980 has dropped to 0.9780 now.
- JPY – dipped to 145.80 but now trades at 147.85.
- GBP – Sterling lifted to 1.1560 on the immediate FED announcement before Powell press conference took it to 1.1340 now. Today the Bank of England is expected to follow FED with a 75bp interest rate hike (biggest in 33 years and taking rates in UK to 3%)
- Stocks – Wall Street were lower with big moves for Tech stocks (AMZN -4.83%, GOOG -3.79%) in particular. US500 closed -96.08 (-2.50%) at 3756, FUTS trades at 3762 now.
- USOil – rallied from $87.75 lows yesterday up to $90.00, after inventory draw-down of -3.1m vs 0.2m. Prices have now dipped to $89.00.
- Gold – from a spike to $1670 yesterday, trades at week lows at $1630 today.
- BTC – slipped from $20.5k, pivot back to test 20k earlier back to 20.2k now.
Today – Swiss CPI, EZ Unemployment, US Weekly Claims, Services PMI, Factory Orders & ISM Services, Norges Bank & BoE Policy Announcements, Speeches from BoE’s Bailey & Mann, ECB’s Lagarde, de Cos, Panetta & Elderson. Earnings – Rolls-Royce, Sainsbury’s, ING, BNP, Stellantis, Euronext, ConocoPhillips, Starbucks, PayPal & Moderna.
Biggest FX Mover @ (06:30 GMT) AUDUSD (-0.61%) from a spike to 0.6480 now down to 0.6315 and testing 0.6300. MAs aligned lower, MACD histogram & signal line negative & falling, RSI 27.05, OS & falling, H1 ATR 0.00279, Daily ATR 0.01077.
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Stuart Cowell
Head Market Analyst
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