• Hlavní
  • Analytika
  • Recenze trhu
  • Weekly Summary: Fed’s Turnaround Celebrated by the Wall Street

Weekly Summary: Fed’s Turnaround Celebrated by the Wall Street

This is the festive week for the Wall Street after the Federal Reserve (Fed) gave investors everything they need for a rally to new all-time highs. The Dow Jones did it already, while the S&P 500 broad market barometer needs another 1.6% to the record. There is little doubt it can take it in the nearest time.

It could not be otherwise after the it was charged by the Fed. New dot plot projections point to a three interest rates cuts by the Fed in 2024. Its chair Jerome Powell boldly expressed that none of the Fed’s officials are expecting any further rates hikes, while thinking when to start cutting the rates. This is an extremely dovish sound from the watchdog that ignores a strong November labour market report and less-than-expected decline of inflation on monthly basis. The headline inflation in November was at 0.1% MoM missing expectations at 0.0%. Other inflation numbers were in line with the forecast with inflation at 3.1% YoY down from 3.2% YoY in October.

The Fed prompted celebrations in the Wall Street after it announced a U-turn in its monetary policy. According to CME FedWatch Tool, investors sharply increased the odds of three consecutive rate cuts in March, May and June from the current rate level of 5.50% to 4.75%. Immediately after the Fed meeting, all three probabilities jumped above 70.0%. To date, they stand at 62.8%, 56.0%, and 54.1%, respectively.

U.S. 10-year Treasuries yields dropped sharply to 3.88%, the lowest since June, from 4.23%. The S&P 500 index rose by 2.8% to 4741 points this week. The all-time high is located at 4819 point, which is just a click away.

Investors were reluctant to the meeting of the European Central Bank (ECB) and Bank of England (BoE). Both central banks expressed more caution and provoked further selloffs of the Greenback. The U.S. Dollar index lost 2.0% this week.

Investors are likely to pay strong attention to the business activity (PMI) data in the Eurozone, the United Kingdom and in the U.S, as this data would be released during triple witching Friday and oversold pressure in the U.S. Dollar. The U.S. Dollar index may recover by 1.0%.

Technically, the S&P 500 index has passed all over the available upside zone closing at the resistance at 4730-4750 points. The rally to the next resistance at 4850 points will be available at the end of next week. So, we should not exclude a possible roll back. More likely, the index will exercise sideways movements.

OPEC+ strikes back trying to push oil prices up. Crude prices are trying to hold themselves above the support at $74.00-76.00 per barrel. They need to close Friday above this level to move up towards $84.00-86.00 per barrel. Otherwise, they may drop to the support at $65 per barrel.

Gold prices are moving inside the mid-term upside formation with targets at $2000-2100 per troy ounce that have already been met. Prices broke through the resistance at $2100 per ounce to $2141 level and rolled backed to the nearest support is at $1990-2010 per ounce. Prices may continue to deteriorate pushed down by a technical weakness period that will last by mid-January potentially leading gold prices below $2000 per ounce.

The Greenback returned to its primary correction targets at 1.08500-1.09500 against the Euro. Further correction is tied to the developments of a Christmas stock rally. In this scenario, the EURUSD may rise towards 1.11500-1.12500. First, the EURUSD has to remove overbought tension.