S&P 500 Futures repeat pre-Fed trading lull amid cautious optimism

S&P 500 Futures eases from the record top flashed on Tuesday.
Vaccine hopes join IMF’s upbeat economic growth forecast but traders turn cautious before FOMC.
Aussie CPI, China’s Industrial Profit flashed mixed signals to add to market’s confusion.

Anil Panchal FXStreet

S&P 500 Futures drop to 3,841, down 0.02% intraday, during Wednesday’s Asian session. The risk barometer refreshed record top the previous day as comments from US President Joe Biden and global vaccine manufacturers favored risks. Also supporting the mood was an upwardly revised global growth forecast by the International Monetary Fund (IMF). Though, trader’s caution before 2021’s first Federal Open Market Committee (FOMC) decision joins mixed economics to challenge the market moves.

Following signals that the covid variants can be cured by global vaccine producers and there are welcome results of vaccinations, US President Biden’s comments suggesting sooner immunization backed the risk-on mood. That said, the US government is up for increasing its vaccine purchase from Moderna and Pfizer, the New York Post said.

Read: US President Biden: Recently discovered that vaccine program is in worse shape than we expected

On the contrary, uncertainty over Biden’s $1.9 trillion fiscal stimulus and ex-US President Donald Trump’s impeachment challenge the mood while joining hands with the typical pre-Fed trading lull.

Also testing the market optimism were mixed data concerning Australia’s inflation and sentiment as well as China’s Industrial Production. During early Asia, Australia flashed better-than-forecast Consumer Price Index (CPI) data for the fourth quarter (Q4). Though, soft Business Confidence from the National Australia Bank (NAB), following Westpac Leading Index, spoiled the mood. It should be noted that China’s Industrial Production for December grew 20.1% YoY versus 15.5% prior.

Other than the S&P 500 Futures, the US 10-year Treasury yields and stocks in Asia-Pacific also portray the market’s indecision ahead of the key event, namely the US Federal Reserve’s monetary policy decision.

Read: Fed Preview: Fearing market froth or boosting Biden's stimulus? Three scenarios

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

USD/JPY eyes August swing low, near 155.20 ahead of US NFP

USD/JPY retests the August monthly swing low during the Asian session on Friday as a more hawkish repricing of BoJ rate-hike bets and a suspected intervention continue to underpin the Japanese Yen. Meanwhile, the US Dollar is seen consolidating the previous day's heavy losses amid soft US bond yields, further weighing on the currency pair as traders keenly await the US NFP report.

AUD/USD consolidates above 0.7200; US NFP awaited

AUD/USD holds steady above 0.7200, near its highest level since mid-May, as bulls await the US NFP report for more cues on the Fed's policy path before placing fresh bets. Meanwhile, the recent decline in US bond yields keeps the US Dollar depressed near its lowest level in over a week and acts as a tailwind for the Aussie amid the RBA's hawkish tilt.

Gold tumbles as blockbuster US NFP lift US Dollar, Treasury yields

Gold (XAU/USD) falls sharply on Friday, snapping a two-day recovery after the US Nonfarm Payrolls (NFP) report surprised strongly to the upside. The metal briefly climbed above $4,500 on Thursday, gaining nearly 2%, but has since erased a large part of that advance.

Crypto’s $638 million buyback boom may not be as bullish as it looks

Decentralized Finance (DeFi) protocols reportedly spent $638 million to buy back their native tokens in August, up 17% from a year earlier. On the surface, the buyback trend suggests the cryptocurrency industry is maturing fast, adopting one of Wall Street’s oldest tools to bolster valuations and distribute revenue. The headline becomes less impressive once the number is opened up.

Why hawkish Bank of Japan expectations aren't enough to sustain the Japanese Yen rally

The Japanese Yen (JPY) experienced a sudden burst higher after falling back below the 160.00 psychological mark against the US Dollar (USD) earlier this week amid a more hawkish repricing of Bank of Japan (BoJ) rate hike expectations.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.