FX Careers

General Market Analysis 02 November 2023

US Stocks Rally After Fed Pause – Nasdaq up 1.7%

US stock indices rallied after the Fed paused rate hikes again and investors interpreted Jerome Powell’s statement from a less hawkish stance. The Nasdaq surged 1.67% higher, the S&P rose 1.05% and the Dow added 0.67% by the end of the day. Treasury yields dropped after the Fed indicated that recent yield rises had done some of their job for them, the 10-year fell to its lowest level since October 17 at 4.766% and the 2-year dropped to 4.942%. The dollar eventually lost ground against the majors with once again the USJPY taking the biggest hit, dropping 0.6%, but this move was also aided by talk of intervention earlier in the day. Oil dropped to a 3-week low in line with the general dollar strength, and Gold experienced another whippy day, now trading around the $1,980 mark.

Fed Balanced as Bonds do the Heavy Lifting.

The Federal Reserve Bank paused rate hikes again at the 5.25%-5.50% range to keep them at a 22-year high, commenting that “tighter financial and credit conditions are likely to weigh on economic activity, hiring, and inflation”. The market reacted on the dovish side of the equation as expectations had been for another ‘hawkish pause’, and although the inflation risk was acknowledged, this was a more balanced view from the committee, as they indicated that recent treasury yield rises have done the job of lifting rates for them. This will undoubtedly leave the market looking even more closely at the bond market as we move forward as well as some key data points shortly.

Another Day, Another Central Bank

It was a mammoth final session to the trading day yesterday, with a plethora of tier 1 data out of the US coming before the highly anticipated FOMC meeting conclusion. Investors will have a session to get their breath back and assess the latest updates as there is little on the event calendar in the Asian session. However, things kick off again once Europe opens. The initial focus will move to Switzerland with the release of the latest CPI data there, but the main event will be the Bank of England’s rate decision later in the session with rates expected to be held at 5.25%. The New York session is likely to be another lively one as always after a Fed rate call, and traders will also be looking at the usual weekly unemployment claims data which comes out swiftly after the open.