Fed speakers and minutes in the spotlight today. Dollar’s rally pauses, but oil and gold suffer losses. RBNZ cuts rates by 50bps, kiwi weakens. China schedules another press conference as local stocks plunge.
Risk Warning: Our services involve a significant risk and can result in the loss of your invested capital. *T&Cs apply.
Please consider our Risk Disclosure: https://www.xm.com/goto/risk/en
Risk warning is correct at the time of publication and may change. Please check our Risk Disclosure for an up to date risk warning
Receive your daily market and forex news analysis directly from experienced forex and market news analysts! Tune in here to stay updated on a daily basis: https://www.xm.com/weekly-forex-review-and-outlook
In-depth forex news analysis on all major currencies, such as EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD.
Welcome to another episode of Global Market Insights, brought to you by XM.com, where we provide meaningful and informative content about the events that affect market trends and shape global markets. You're listening to the Daily Common Podcast at XM.com for Wednesday, October 9th by Hilias Gereco Lobelos. I'm Cristina Madujos. The public discussion regarding the Fed's next steps continues as a plethora of Fed members are on the wires almost on a daily basis. There is unexpected unanimity among members that the Fed will keep on easing its monetary policy stance, despite last week's strong jobs report. In fact, the dot plot published that the September Fed gathering has two 25 basis points rate cuts penciled in until year end. Interestingly, the market seems to have run ahead of itself as it has quickly priced out the probability of a 50 basis points move, and it is now actually pricing in a 12% chance of no rate cut at the November 7th meeting. Such an outcome looks implausible at this stage as it could cause an acute market reaction, particularly inequities. Having said that, today's Fed minutes and Thursday's CPI report could somewhat complicate the outlook. This September, 50 basis points rate cut was almost unanimously approved, and most Fed members have since publicly expressed their support. However, it would be interesting to read any comments about how the Fed could react if the labor market remains tight, keeping wages growth elevated, and inflation fails to ease further. Following a very strong performance last week, the US dollar is struggling to record further gains. The revised Fed rate cut expectations have been digested, with the dollar bulls looking for a boost from other areas like geopolitics. In the Middle East, the back and forth between Israel and Iran's proxies continues with a market still trying to guess Israel's retaliatory strike. During pressure from US President Biden, it looks like Israel will avoid hitting Iran's nuclear facilities. It could focus on Iran's oil industry, although reports yesterday mentioned that Israel might at the end prefer to target only military installations. As a result, the commodity space is experiencing some rare losses this week. Gold is down almost 1.5% while WTI oil futures are hovering around the $74 level. The Reserve Bank of New Zealand did not defy expectations and announced a 50 basis points rate cut earlier today. The overall rhetoric accompanying the decision was da-vish, with the committee now feeling slightly more confident about the inflation outlook. The market is currently pricing in an 80% probability for another 50 basis points rate move at the final meeting for 2024, held on November 27. But this move will most likely depend on the Fed's decisions and developments in China. As a result, the Kiwi is losing ground against both its neighboring Aussie and the Dollar. Interestingly, the Kiwi Dollar pair is trading at a critical level. A decisive drop below the O6060 area could lead to a more protracted correction. Tuesday's press conference from China's National Development and Reform Commission created more questions than answers, with Chinese stocks reacting negatively. The Shanghai Composite Index is deeply in the red again today, prompting a response from China's administration. On Saturday, the finance ministry will detail its two trillion-uan fiscal stimulus package. Failure from the Chinese officials to present a realistic but ambitious plan could open the door to another negative market reaction. This was today's daily Common Podcast at XM.com. Thank you for listening to another episode of Global Market Insights brought to you by XM.com. For more in-depth technical and fundamental analysis, be sure to visit www.xm.com/research. [BLANK_AUDIO]
