Search LOGIN

U.S. dollar gains ahead of Fed; Swedish crown falls after hike

“The last 10% it takes to launch something takes as much energy as the first 90%.” — Rob Kalin

 

 

 HEADLINES

 

 

  • U.S. dollar gains ahead of Fed; Swedish crown falls after hike
  • Gold retreats as dollar, yields firm ahead of Fed rate hike verdict
  • Oil prices drop in advance of expected Fed rate hike
  • Dow tumbles nearly 500 points as selling increases before key Fed rate decision
  • Yields on 2-year, 10-year Treasury notch new highs ahead of Fed’s rate hike decision
  • EUR/USD: More sideways range trade is likely – Scotiabank
  • USDJPY Near Term: Upside favored

 

 

U.S. dollar gains ahead of Fed; Swedish crown falls after hike

 

 

The dollar rose on Tuesday, trading near a two-decade high, as investors held firm on expectation of another aggressive rate hike by the Federal Reserve, the centerpiece of a week packed with central bank meetings.

The Fed starts a two-day meeting on Tuesday, with rate futures traders pricing in an 81% chance of a 75 basis point hike and a 19% probability of a 100 bps of tightening.

The dollar index was on track for its fifth weekly gain in six and was last up 0.5% at 110.04 . It's not far from 110.79, a level hit earlier this month for the first time since June 2002.

 

 

COMMODITIES

 

 

Gold retreats as dollar, yields firm ahead of Fed rate hike verdict

 

 

Gold prices dropped as much as 1% on Tuesday as the dollar and Treasury yields firmed, and investors squared positions ahead of a widely expected large interest rate hike by the U.S. Federal Reserve this week.

Spot gold was down 0.7% at $1,664.19 an ounce by 1:46 p.m. ET (1746 GMT), lingering near a 29-month low hit last week.

U.S. gold futures settled 0.4% lower at $1,671.10.

 

 

ENERGY

 

 

Oil prices drop in advance of expected Fed rate hike

 

 

Oil prices dipped on Tuesday, following other risk assets lower, as the dollar stayed strong and investors anticipated more central bank interest-rate hikes designed to quell inflation.

The U.S. Federal Reserve is likely to raise interest rates by another 75 basis points on Wednesday to rein in inflation. Those expectations are weighing on equities, which often move in tandem with oil prices. Other central banks, including the Bank of England, meet this week as well.

Higher rates have bolstered the dollar, which remained near a two-decade high against peers on Tuesday, making oil more expensive for holders of other currencies.



 

STOCKS

 

 

Dow tumbles nearly 500 points as selling increases before key Fed rate decision

 

 

Stocks tumbled on Tuesday as the sell-off on Wall Street mounted and investors braced for another large rate hike due out Wednesday from the Federal Reserve.

The Dow Jones Industrial Average fell 450 points, or 1.45%. The S&P 500 shed 1.4% and the Nasdaq Composite slid 1.2%.

The Federal Open Markets Committee began its two-day policy meeting on Tuesday, where central bankers are expected to announce a 0.75 percentage point rate hike on Wednesday. Stocks have tumbled in recent weeks as comments from Fed Chair Jerome Powell and an unexpectedly hot August consumer price index report caused traders to prepare for even higher rates until inflation cools.

 

 

Yields on 2-year, 10-year Treasury notch new highs ahead of Fed’s rate hike decision

 

 

Treasury yields marched higher on Tuesday as traders awaited the Federal Reserve’s decision on interest rate hikes due out Wednesday.

The yield on the policy-sensitive 2-year Treasury rose a basis point to 3.96% after reaching 3.983% — a level it had not hit since 2007. The yield on the 10-year Treasury last traded up 8 basis points to 3.567%. Earlier in the session, the yield on the 10-year note jumped to 3.593% to trade near levels not seen since April 2011.

Yields and prices have an inverted relationship and one basis point equals 0.01%.

 

 

ANALYSIS

 

 

EUR/USD: More sideways range trade is likely – Scotiabank 

 

 

“Short-term price signals are neutral as are trend strength signals, implying more sideways range trade is likely.”

“The broader technical tone turns more positive above 1.0120 (major trend resistance).”

“Support is 0.9865/75.”

“Benchmark natgas prices continue to ease and Germany announced that it will spend another EUR2.5B  on LNG to ease the energy crisis. High energy costs are, however, coming at a cost. The eurozone current account recorded a EUR19.9B deficit in Jul, the weakest since 2008.”

 

 

CHART

 

 

USDJPY Near Term: Upside favored

 

 

Technical View: Long position above 143.44. Target 144.1. Conversely, break below 143.44, to open 143.19.

Comments: The pair remains supported. Further advance favored.

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar


Foodnotes

https://www.reuters.com/markets/us/dollar-firm-markets-brace-another-big-fed-rate-hike-2022-09-20/
https://www.reuters.com/article/global-precious/precious-gold-retreats-as-dollar-yields-firm-ahead-of-fed-rate-hike-verdict-idUSL4N30R2M6
https://www.reuters.com/markets/europe/oil-prices-steady-prospect-fed-hikes-may-curb-fuel-demand-2022-09-20/
https://www.cnbc.com/2022/09/19/stock-market-futures-open-to-close-news.html
https://www.cnbc.com/2022/09/20/2-year-treasury-yield-reaches-fresh-15-year-high-.html
https://www.fxstreet.com/news/eur-usd-more-sideways-range-trade-is-likely-scotiabank-202209201434

UNLIMITED ACCESS!

The best way to keep track of your accounts. Get notifications
and access your dashboard any time!

Open a live or demo account, make secure deposits or get latest
market updates for free!