US stocks rebound, as hopes of dovish Fed take hold
|US markets are outperforming ahead of tomorrow's FOMC meeting, with expectations of a potentially dovish shift driving the Dow higher and dollar lower.
- European losses fail to take hold in the US
- Inverted yield curve highlights wider economic fears
- Brexit concerns take the back seat despite fears over no-deal exit
European stock market confidence has continued to suffer today, with the FTSE 100 and DAX both continuing their declines to further dent hopes of a Santa rally. US markets are starting their trading day in somewhat more positive fashion, although fears of the worst December for the Dow since the great depression still linger after recent losses. Fears over the slowdown in the Chinese economy, coupled expectation of another rate hike tomorrow are key amongst fears that have hurt global stocks. With the yield curve inverted, there is a clear market indicator that is making economists worry that markets are fearful of the future. However, while the potential for another Fed rate hike is not
ideal during a bear market, US indices are in a more optimistic mood with hopes that recent declines will force a dovish shift in the Fed's dot plot.
Brexit fears are doing little to dent the pound today, with a weaker dollar instead dragging GBPUSD lower amid hopes of a less hawkish Fed tomorrow. EURGBP have been particularly volatile of late, with the EU warning that their plans for a no-deal take the form of protective measures rather than a means to ensure that relations with the UK remain strong. With the UK vote in parliament taking place in mid-January, time is running out fast given that a widespread rejection is widely predicted. Interestingly, Theresa May's plea for greater concessions from the EU are reminiscent of David Cameron's largely unsuccessful dealmaking with the EU which formed the basis of the remain proposal back in
2016.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.