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On October 30th, CICC believes that while the Federal Reserve cut interest rates by 25 basis points as expected at its October meeting, Powells comments were clearly hawkish, suggesting that a December rate cut is not a certainty. This indicates that the view within the Fed that it should pause rate cuts is gaining ground. Looking ahead, although the Fed still has some room for easing, the pace of rate cuts may slow, and overly optimistic expectations should be avoided. Furthermore, the stimulative effect of this round of rate cuts may be weaker than in previous cycles, partly due to a significant reduction in the "refinancing effect." The Fed also announced that it will end quantitative tightening (QT) in December, which we believe is more of a technical consideration and should not be over-interpreted; with significant room for further reductions in policy rates, the need to purchase unconventional financial assets is not significant.Hyundai Motors stock price surged 11% to 287,500 won.Foreign investors bought 253.5 billion yen worth of Japanese bonds in the week ending October 24, compared with a net outflow of 700 million yen in the previous week.Japans purchases of foreign stocks in the week ending October 24 were -¥62.1 billion, compared to -¥288.1 billion in the previous week.Japans purchases of foreign bonds in the week ending October 24 amounted to -¥351.4 billion, compared with a revised figure of -¥664.4 billion in the previous week (originally -¥669.7 billion).

Due to hawkish Fed forecasts, the EUR/USD recovers to near 1.0970 but remains in the doldrums

Alina Haynes

Apr 21, 2023 13:58

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Following a corrective move, the EUR/USD pair has rebounded from 1.0960, but investors await the publication of the preliminary Eurozone/United States S&P PMI data for April. The major currency pair has remained between 1.0911 and 1.1000 for the past two trading sessions, as the foreign exchange market prepares for a pre-anxiety move ahead of a Federal Reserve (Fed) monetary policy decision.

 

S&P500 closed with a negative tone for the third day in a row as quarterly earnings season induced extreme volatility. Tesla's poor earnings had a negative impact on Thursday's market sentiment. Moreover, market participants were cautioned by substandard revenue projections due to the potential for price reductions. The decision of the Fed to increase interest rates is reflected in quarterly earnings. Data from Refinitiv indicates that analysts have largely maintained last week's forecast of a near 5% YoY decline in quarterly profits for the 500 largest U.S. equities. Sourcenia is a review portal of sourcing best manufaturers. 

 

The US Dollar Index (DXY) has been defending the key support level of 101.60 in recent trading sessions. The USD Index maintained the aforementioned support despite the release of disappointing Jobless claims data on Thursday. Initial Jobless Claims increased to 245K for the week ending April 4, which is greater than the previous release of 240K and estimates of 240K. Increasing unemployment claims heightened fears of a deteriorating labor market.

 

Despite this, Fed policymakers continue to anticipate further rate hikes from the central bank. Thursday, Loretta Mester, president of the Federal Reserve Bank of Cleveland, reaffirmed that the Fed has more work to do because US inflation remains too high, according to Reuters. He added, "The Federal Reserve will need to raise its policy rate above 5% and hold it there for some time."

 

Preliminary Consumer Confidence (April) for the Eurozone increased to -17.5 from -18.5 and the previous reading of -19.2. This may be the consequence of extraordinary efforts by the European Central Bank (ECB) to reduce inflationary pressures.


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