- Market sentiment remains mixed as traders brace for next week’s Fed meeting after mixed PMIs.
- Cautious mood ahead of US Q4 GDP joins blackout periods at Fed, ECB to restrict market moves.
- S&P 500 Futures extends pullback from six-week high, US Treasury bond yields stay defensive.
- Light calendar, mixed clues keep traders guessing ahead of US GDP, FOMC.
Risk appetite wanes during Wednesday’s sluggish Asian session as traders try to gauge the recent activity data ahead of the next week's all-important monetary policy meetings, not to forget Thursday’s US Gross Domestic Product (GDP) for the fourth quarter (Q4). It’s worth noting that the mixed earnings and China’s absence from the markets, as well as cautious mood ahead of the European Central Bank (ECB) and the Federal Reserve (Fed) monetary policy meetings, seem to challenge the momentum traders of late.
While portraying the mood, S&P 500 Futures drop half a percent to 4,012, extending the previous day’s U-turn from the 1.5-month high. Further, the US 10-year Treasury bond yields drop 1.5 basis points (bps) to 3.45% while the two-year counterpart posted the biggest daily loss in a week around the 4.15% level.
It’s worth noting that Wall Street closed mixed on Tuesday as a technical glitch joined the mixed earnings report. “Fourth quarter earnings season is in full swing, with 72 of the companies in the S&P 500 having reported. Of those, 65% have beaten consensus, just a hair below the 66% long-term average, according to Refinitiv,” said Reuters.
Among the key equity headlines were the underwhelming forward guidance from 3M and General Electric, as well as the US Justice Department’s lawsuit against Google.
Elsewhere, the US Dollar Index (DXY) remains pressured as the US activity data for January remained below 50.0 level and suggested contraction despite improving a bit. The same help the prices of Gold and Oil to remain firmer.
It should be observed that the early-day release of quarterly inflation data from New Zealand and Australia entertained traders with the AUD/USD leading the G10 bulls around 0.7090 by the press time.
Looking forward, the first readings of the US fourth-quarter (Q4) Gross Domestic Product (GDP), up for publishing on Thursday, will be crucial to watch for immediate directions. The reason appears logical due to the next week’s Federal Open Market Committee (FOMC) meeting, as well as the talks of the US recession. Forecasts suggest the world’s biggest economy eases with 2.8% annualized growth.
Also read: US Gross Domestic Product Preview: Three reasons to expect a US Dollar-boosting outcome
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.
Recommended content
Editors’ Picks
EUR/USD fluctuates near 1.0700 after US data
EUR/USD stays in a consolidation phase at around 1.0700 in the American session on Wednesday. The data from the US showed a strong increase in Durable Goods Orders, supporting the USD and making it difficult for the pair to gain traction.
USD/JPY refreshes 34-year high, attacks 155.00 as intervention risks loom
USD/JPY is renewing a multi-decade high, closing in on 155.00. Traders turn cautious on heightened risks of Japan's FX intervention. Broad US Dollar rebound aids the upside in the major. US Durable Goods data are next on tap.
Gold stays in consolidation above $2,300
Gold finds it difficult to stage a rebound midweek following Monday's sharp decline but manages to hold above $2,300. The benchmark 10-year US Treasury bond yield stays in the green above 4.6% after US data, not allowing the pair to turn north.
Worldcoin looks set for comeback despite Nvidia’s 22% crash Premium
Worldcoin price is in a better position than last week's and shows signs of a potential comeback. This development occurs amid the sharp decline in the valuation of the popular GPU manufacturer Nvidia.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.