Markets trade in narrow ranges ahead of Thanksgiving

Headlines

* Fed minutes show unity on cautious approach to future rate hikes  

* ECB’s Lagarde says it’s too early to declare victory on inflation

* Gold hovers around $2000 on expectations of end of rate hikes

* Nvidia beats street estimates

FX: USD sell-off paused after hitting its lowest levels since late August. The DXY dropped to 103.17 before paring losses and settling higher on the day. The latest Fed minutes showed that policymakers unanimously favoured a cautious approach to future rate changes. They based any moves going forward on any future moves on progress towards their inflation goal. Fed fund futures were barely changed.

EUR popped up to 1.0965 and above a key Fib level before finishing lower on the day. Prices have been overbought on momentum indicators, as we highlighted yesterday. An ECB official said market expectations for rate cuts are too optimistic.

GBP continued its move higher for a third straight session, outperforming other major currencies. Cable moved above the 100-day SMA at 1.2505. Hawkish comments from BoE Governor and MPC official Mann boosted sterling sentiment. The 50% mark of the summer sell-off is at 1.2459.

USD/JPY fell for a fourth day though the pair pared losses after dropping to 147.15. The yen is in danger of a short squeeze as it is currently the most heavily shorted since at least 2020.

AUD advanced to a high of 0.6589 which is the 200-day SMA and near the 50% level of the summer drop. Prices retreated but the upside break from Monday is still intact.

Stocks: US equities settled lower with tech leading the indices lower. The benchmark S&P 500 lost 0.20% to settle at 4538. The tech-laden Nasdaq finished 0.58% lower at 15,933. The Dow settled 0.18% lower at 35,088. Disappointing earnings results from major US retailers dragged on the indices. Lowe revised earnings guidance lower and Kohl’s plunged over 10% due to a bigger-than-expected quarterly sales drop. Nvidia reported after the close with earnings crushing estimates, but China guidance lowered.

Asian futures are in the green. APAC stocks trade mostly higher on Tuesday with tech led gains and Chinese markets supported by property sector stimulus.

Gold consolidated its recent move after five days of gains. The precious metal hit a two-week high through the $2000 level. Expectations that the Fed has reached the end of its tightening cycle are cheering gold bugs.

Chart of the Day – S&P500 pauses near highs

The broad-based benchmark US index has bounced over 10.5% since its lows in late October at 4103. The July sell-off lost 10.92% after prices made fresh cycle highs above 4600 in late July. Generally better earnings and falling bond yields have boosted tech stocks especially. Indeed, the Magnificent seven have propelled to new highs after the weekend’s tailwind to the tech titans with the OpenAI goings-on. Above 4607 is the March 2022 high at 4637 before the all-time top at 4818 from January last year. Prices are currently overbought on the daily RSI.

AUTHOR

Jamie Dutta >

Jamie Dutta is a Market Analyst for Vantage. He comes with extensive experience as a full-time trader and financial market commentator, having worked as a trader in top tier investment banks and trading houses.