Global assets stuck in a range ahead of FOMC decision

Global stocks remained on edge on Wednesday as investors waited for the upcoming interest rate decision by the Federal Reserve. In Europe, the DAX index moved sideways while the CAC 40 dropped by 0.40%. In the United States, the Dow Jones index rose by 127 points while the Nasdaq 100 index jumped by 56 points. The Fed is expected to deliver its first 0.50% rate hike in over 22 years in a bid to slow rising inflation. Analysts also expect that the bank will start implementing its quantitative tightening policy that includes reducing its balance sheet by about $75 billion per month. 

The earnings season continued as companies publishing mixed quarterly results. Maersk, the biggest shipping company, lifted its forward guidance and warned that risks were growing. It expects to have a profit of $24 billion this year, better than the previous $19 billion. Maersk is often seen as a barometer for the world economy since it carries about one in six containers globally. In the UK, Boohoo shares declined by more than 11% after the company published weak results. Meanwhile, Lyft’s shares collapsed by more than 25% after the company published a weak guidance. The report pushed Uber to upgrade its guidance earlier today.

The New Zealand dollar held steady after the latest economic data from the country. According to the statistics agency, the labor cost index rose from 2.8% in Q4 to 3.1% in the first quarter. This increase was in line with what most analysts were expecting. The unemployment rate remained unchanged at 3.2% while the participation rate declined from 71.10% to 70.90%. In a press conference, the country’s central bank governor said that house prices remain above sustainable level. Early signs show that prices have started to retreat in the past few months. He also warned that inflation was also at elevated levels. 

NZD/USD

The NZD/USD pair was little changed on Wednesday after the statements by the RBNZ governor. On the four-hour chart, the pair has moved between the middle line of the Bollinger Bands. It has also moved slightly below the 25-day moving average while the Relative Vigor Index has moved above the neutral level. The MACD has also formed a bullish crossover pattern. Therefore, the pair will likely remain in this range ahead of the upcoming Fed decision.

EUR/USD

The EURUSD pair moved sideways ahead of the FOMC decision. On the four-hour chart, the pair’s Bollinger Bands have narrowed, which is a sign that volatility is easing. The Relative Strength Index has moved slightly above the oversold level while the Stochastic Oscillator moved to the middle level. Therefore, the pair will likely have a bullish breakout after the FOMC since the decision has already been priced in.

USD/JPY

The USDJPY pair also moved sideways and is trading at 129.92, where it has been in the past few days. This price is slightly below the year-to-date high of 131.25. It has moved slightly below the 25-day moving average while the RSI and momentum indicator are pointing downwards. Therefore, the pair will likely have a bearish breakout in the near term.