In a extensively anticipated transfer, the Federal Reserve (Fed) hiked its coverage rate of interest by 25 basis-point (bp) to the 5.25%-5.5% vary and left the door open for one more hike in September. However provided that Fed Chair Jerome Powell additionally guided for fee selections to be on a “meeting-by-meeting” foundation, extra tightening strikes nonetheless lack dedication at present time limit. In gentle of the Fed’s data-dependent stance, together with the broader pattern of moderating US inflation, Fed fee expectations remained agency for an prolonged pause by the remainder of the 12 months.
Maybe one thing to maintain on the again of thoughts is that the Fed Chair nonetheless doesn’t see inflation returning to the Fed’s 2% inflation purpose till 2025, which can recommend that he foresees a extra arduous course of in pushing pricing pressures down transferring ahead. The abating of base results and a few firming in commodities costs recently might current some potential challenges.
Wall Road managed to pare earlier losses to shut flat for the day, with after-market strikes edging increased on Meta’s outcomes. A beat on all fronts (prime and backside line, energetic customers base, common income per person), together with a better-than-expected steerage for the third quarter, had been greater than enough to place a 6.8% acquire in its share worth in after-hours buying and selling.
The US greenback had been 0.3% decrease, alongside a downtick in US Treasury yields. One to look at within the commodities house on a extra subdued US greenback could also be copper costs. Costs have been buying and selling inside an ascending triangle sample over the previous two months, with latest retest of the higher trendline resistance on the US$8,700/tonne stage as soon as extra. Close to-term upward momentum is supported by an growing transferring common convergence/divergence (MACD) and relative energy index (RSI) above 50, with any profitable break above the extent probably paving the best way to retest the US$9,000/tonne stage subsequent.
Supply: IG charts
Asian shares look set for a barely constructive open, with Nikkei +0.11%, ASX +0.54% and KOSPI +0.57% on the time of writing. The Nasdaq Golden Dragon China Index had been up 2.8% in a single day, following a extra lacklustre session within the earlier session, with cautious optimism nonetheless at play for additional follow-through in China’s financial stimulus. Nearer to dwelling, the main focus is on UOB’s 2Q 2023 end result launch this morning.
The financial institution continues to profit from the online curiosity earnings tailwind, with a 31% year-on-year soar within the section uplifting total earnings by 27%, consistent with forecasts. Web curiosity margin continues to reasonable for the second straight quarter (2.12% from earlier 2.14%), however some might discover consolation within the softer tempo of decline, which might recommend some stabilising above the two% stage for the months forward. Mortgage progress and web payment earnings stays extra subdued with single-digit decline from a 12 months in the past, however to this point, administration’s steerage might have supplied a constructive spin on outlook, pointing to some financial resilience within the area. Dividends had been raised to S$0.85/share from final 12 months’s S$0.60/share, probably leaving a ahead dividend yield of 5.5%.
For UOB’s share worth, a spot increased this morning has led to a retest of key resistance confluence on the S$29.14 stage. Whereas patrons stay in management, with its MACD heading above zero and RSI sustaining above the important thing 50 stage, a break above the S$29.14 resistance could also be warranted to assist additional upmove to the psychological S$30.00 stage. On the draw back, the earlier consolidation vary on the S$28.45 stage might function near-term assist.
Supply: IG charts
On the watchlist: EUR/USD resting at assist forward of European Central Financial institution (ECB) assembly
To this point, the EUR/USD has been buying and selling on an upward pattern, with a collection of upper highs and better lows displayed since October final 12 months. Following a lacklustre displaying within the US greenback in a single day post-FOMC, the EUR/USD is discovering an try and stabilise at a near-term assist across the 1.103 stage, with all eyes on the ECB rate of interest resolution later at present.
Whereas fee expectations had been firmly priced for an prolonged pause from the Fed transferring ahead, the ECB is predicted to maintain mountain climbing over the following two conferences. Any validation on that entrance or extra aggressive tone from the ECB might be supportive of the pair within the close to time period. With a bearish crossover on MACD and declining RSI pointing to some moderation in near-term momentum, the 1.103 stage should see some defending forward. Failing to take action might pave the best way in the direction of the 1.083 stage as the following line of assist.
Supply: IG charts
Wednesday: DJIA +0.23%; S&P 500 -0.02%; Nasdaq -0.12%, DAX -0.49%, FTSE -0.19%
Article written by IG Strategist Jun Rong Yeap
DailyFX supplies foreign exchange information and technical evaluation on the traits that affect the worldwide forex markets.