Fed’s meeting minutes could alter the market’s expectations
The release of the Fed’s January meeting minutes in today’s American session, tend to dominate the market’s attention.
It should be noted that the market expectations for the Fed to cut rates were enhanced since last week as the release of the January US CPI rates indicated an easing of inflationary pressures in the US economy.
Yet the market’s dovish expectations for the Fed’s intentions could change depending on the content of the Fed’s meeting minutes.
Xlence Research Team opinion
Should we see Fed policymakers hesitating to ease the bank’s monetary policy the content of the minutes may prove to be hawkish and in such a case, the market may have to reposition itself as its dovish expectations may be contradicted and thus we may see the USD getting some support.
On the flip side, should we see Fed policymakers being convinced for a possibly faster easing of the Fed’s monetary policy, we may see the market’s dovish expectations being enhanced and thus the release could weigh on the greenback.
Yet the release may effect other trading instruments, beyond the FX market. Riskier assets such as US equities may slide should the Fed sound hawkish, while a possible dovish tone could provide support for US stock markets.
Aussie traders focus on Australia’s January employment data
Australia is to release its January employment data in tomorrow’s Asian session and Aussie traders are expected to focus on the release. Currently economists, expect the unemployment rate to tick up to 4.2% while at the same time expect the employment change figure to drop from December’s 65.2k to 20k.
Hence expectations for both indicators tend to imply a possibility that the Australian employment market has eased over the past month. The release is expected to affect also the market’s expectations for RBA’s intentions.
A wider than expected easing of the Australian employment market, could tame the market’s hawkish expectations further for RBA, while an unexpected tightening of the Australian employment market could enhance market expectations for a possible parallel tightening of RBA’s monetary policy.
Xlence Research Team opinion
Should we see the actual rates and figures differing from current forecasts, two scenarios may emerge. Should the employment data show a tighter than expected Australian employment market, we may see the Aussie getting substantial support and vice versa, weaker than expected Australian employment data could weigh on AUD.
US stock markets remain stable
US stock markets remained relatively stable as the markets reopened yesterday after Monday’s public holiday. As for earnings releases, we note that Palo Alto showed figures surpassing market expectations for both the EPS and the revenue figures, yet on the flip side the company’s forward guidance may have disappointed traders.
We also note the ongoing developments regarding the takeover of Warner Bros, by Paramount, with the former giving another chance to the latter for a higher bid. Meanwhile Netflix is closely watching the situation.
Xlence Research Team opinion
Overall we still see the market’s worries for oversized AI investments in the US tech sector still present on a fundamental level, Yet worries seem to be slowly digested and thus easing, which may allow US equities to gain some ground.
On the flip side should the market’s worries intensify again we may see the US stock markets being on the retreat.
Disclaimer: This information is not considered investment advice or an investment recommendation, but instead a marketing communication.
