FX Careers

General Market Analysis | 11 October 2023

Wall St Climbs on Fed Change – Nasdaq up 0.6%

US stock indices notched up a third straight winning day as more dovish comments from Fed members helped lift investor confidence. Both Raphael Bostic and Neel Kashkari talked up a ‘soft landing’ for the US whilst also talking down the need for a rate hike. The Dow jumped 0.4%, the S&P rose 0.52% and the Nasdaq closed the strongest, up 0.58% as US focus continued to dominate investor thinking despite the tense geo-political situation in the Middle East. US treasury yields dropped after having a holiday on Monday with the benchmark 10-year back down to 4.66% and the dollar took another step down in the FX market whilst Gold and Oil remained at higher levels.

Fundamentals Still Driving the Big Dollar

Currency traders have swiftly shrugged off fears of an escalating conflict in the Middle East and have been focusing on fundamentals over the last couple of days. Usually in circumstances as we have at the moment, the dollar would be on that ascendancy as a safe-haven asset, but aside from some understandably gapping on Monday morning, currency markets have discounted (hopefully correctly) the geo-political risks from the Israel- Palestine conflict and we have seen more of a reaction from dovish Fed comments. However, we now hit crunch time in the week for those dollar bears as key US data is set to have more impact in addition to the geo-political risks present. Today in the US session we have key PPI data and that is followed tomorrow by the bigger CPI data print, if we see stronger results from either or both, expect the dollar to recover its recent lost ground and to do so swiftly.

Geo-Politics, Data and Fed Minutes in Focus Today

Asian markets have managed to start the day on the front foot after taking over from where their US counterparts left off. For the moment, fundamentals are dictating market moves and traders will be looking ahead to the first of two key inflation data releases in the US later today. The APAC session is relatively quiet in terms of scheduled events as is the European day, although expect traders to keep a very close eye on the newswires there for any updates out of the Middle East and their implications. The US session sees the event calendar wake up with the latest update on PPI data due, comments from the FOMC member Waller and the FOMC Meeting Minutes later in the day.