Thursday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,811 -0.18%
DAX 30 11,518 -0.52%
WTI Crude Oil 61.22 -0.63%
GOLD 1,224 -0.26%
Bitcoin 6,408 -1.42%
EUR/USD 1.1391 -0.23%

Although the Federal Reserve is expected to keep its benchmark rates unchanged today following three tightening steps so far this year, financial markets are virtually unchanged across assets classes before the central bank rate decision and monetary statement.

Risk assets celebrated the end of the pre-election uncertainty yesterday, despite the fact that the midterms resulted in a legislative gridlock, with especially US stocks gaining ground and recovering another part of the October selloff.

USD/JPY, 4-Hour Chart Analysis

The USD/JPY has been very strong in recent days amid the risk rally and despite the broad Dollar pullback, and it’s now very close to its early October high. The Greenback’s strength compared to the most important safe-haven currency underlines the extent of the bullish forces behind the Dollar’s rally, as it has been able to gain ground against all of the majors despite the different market environments.

While currently, the USD is well below its highs against the some of the China-related currencies, thanks to the trade-related optimism, the Dollar bull is well and alive in our opinion. Until a marked slowdown the US economy, we could see further highs in the Dollar index, in spite of the cyclical corrections against some of its peers.

VIX Plunges Below 17, but Oil Fails To Join Rally

VIX (US Volatility Index), 4-Hour Chart Analysis

 

The US Volatility Index (VIX) fell below the crucial 17 level that we pointed out this weekend, and that also points further gains in US stocks for the coming days, but we still expect the broader downtrend to resume.

Rallies still should be treated as selling opportunities, especially as the relatively weaker markets in Europe and Asia are still not showing signs of strong recovery, even as the major US indices are once again outperforming their global peers.

Nasdaq 100 Futures, 4-Hour Chart Analysis

Equities are also having a slow session so far, and while that’s not a surprise on a Fed-day it also solidifies the recent bounce, especially as Treasuries are signaling a slightly hawkish Fed statement, with especially the short end of the yield curve pushing higher.

The swift rise in yields contributed to the decline in stocks, but now investors seemingly got used to the new reality of rates, and the broader bearish trend will likely resume on another catalyst.

WTI Crude Oil, 4-Hour Chart Analysis

Commodities are trading with a bearish bias ahead of the Fed, with especially crude oil looking weak again, and yesterday’s huge US inventory build just made matters worse for energy bulls. The WTI contract is still holding up above the $60 level, but the spike below that support, that we speculated on during the weekend is still very likely before a meaningful rally, despite the deeply oversold momentum readings.

Gold is hovering near the middle of its consolidation range in the meantime, with the $1225 level acting as a price magnet, while copper continued its bearish drift after the failed break-out attempt of its broad correction pattern. As usual we expect a very active and hectic post-Fed period, and day-traders should be aware of the stop runs and false moves that often happen in the volatile environment.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

EUR/USD, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Featured image from Shutterstock



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