• S&P 500 Futures extend bounce off yearly low, US Treasury yields stay near multi-year high.
  • Off in Japan, China adds strength to the pre-Fed trading lull.
  • Fed’s preference for orderly markets, geopolitical and covid-led challenges test hawks amid mostly priced-in outcomes.
  • US ISM Services PMI, ADP Employment Change will be important to watch as well.

Global markets remain jittery, mildly positive though, as traders remain cautious ahead of the key Federal Open Market Committee (FOMC) meeting outcome, up for release late Wednesday. In addition to the pre-Fed anxiety, holidays in China and Japan also restrict the market moves.

Even so, the S&P 500 Futures print mild gains while marching towards 4,200, up for the third consecutive day. However, the US 10-year Treasury yields remain inactive at around a 3.0% rate as an off in Tokyo limits bond moves in Asia.

Underpinning the latest optimism could be a pullback in the US bond yields from the highest levels since December 2018. More importantly, expectations that the US Federal Reserve (Fed) will match the widely anticipated, as well as priced in, 50 basis points (bps) of a rate hike and provide hints of balance sheet normalization also back the latest consolidation.

While considering the same, the Australia and New Zealand Banking Group (ANZ) said, “Given the weight the FOMC puts on forward guidance and a preference for orderly market moves, particularly given current geopolitics and the slowdown in China, such a surprise seems unlikely.”

It’s worth noting that the US dollar bears the burden of the market’s indecision as it stays ground around its 20-year top, recently sidelined near 103.50. This ignores the strong JOLTS Job Openings and Factory Orders for March data published the previous day. Also, escalating geopolitical fears and covid woes would have also underpinned the US dollar strength but could not.

Looking forward, the Fed’s battle to tame the inflation will be crucial to watch but the monthly print of US ISM Services PMI and ADP Employment Change will also be important for clear directions. Additionally, updates from Russia and China are likely to help in making trade decisions as well.

Read: Fed May Preview: 'Less hawkish' is the new dovish

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

EUR/USD extends recovery above 1.0350 ahead of EU inflation, Powell

EUR/USD extends recovery above 1.0350 ahead of EU inflation, Powell

EUR/USD is extending recovery gains above 1.0350 in the early European morning this Wednesday. The US Dollar retreats further amid a better market mood. All eyes remain on the Eurozone inflation, US ADP and Fed Chair Powell's speech. 

EUR/USD News

GBP/USD recovers from 1.1940 as US Dollar refreshes day’s low, Fed Powell’s speech eyed

GBP/USD recovers from 1.1940 as US Dollar refreshes day’s low, Fed Powell’s speech eyed

GBP/USD has sensed responsive buying action around 1.1940 as risk aversion loses luster. The Bank of England is expected to advance its interest rates to 4.25% in Q1CY2023. GBP/USD has gained strength after testing the 200-EMA around 1.1960.

GBPUSD News

Gold bulls seek validation from $1,760 and Fed Chair Powell

Gold bulls seek validation from $1,760 and Fed Chair Powell

Gold price remains firmer for the second consecutive day, bounces off 10-DMA, short-term key support. Fed Powell’s first speech after November, hawkish hopes tease Gold sellers.

Gold News

Three on-chain metrics suggest Bitcoin price has bottomed, here’s where BTC is going next

Three on-chain metrics suggest Bitcoin price has bottomed, here’s where BTC is going next

Bitcoin price action has spiked 5% over the last 24 hours, hinting at the start of an optimistic scenario. Previous publications have already explored why BTC is ready for a bear market rally from both short-term and long-term outlooks.

Read more

Eurozone Inflation Preview: EUR/USD fate hinges on confirmation of peak inflation Premium

Eurozone Inflation Preview: EUR/USD fate hinges on confirmation of peak inflation

ECB President Christine Lagarde told European lawmakers on Monday that Eurozone inflation hasn’t peaked after reaching the highest levels on record in October. Will the Preliminary Eurozone inflation print confirm a peak in inflation?

Read more

Forex MAJORS

Cryptocurrencies

Signatures