VOT Research Desk
The majority of yesterday’s trading session saw US stocks walking the line between small gains and small losses, but the release of the most recent Federal Reserve (Fed) minutes gave the bulls the upper hand because it was revealed that a “substantial majority” of Fed members believed that slowing the rate hike pace was a good idea.
It’s nothing new; Fed Chair Jerome Powell made it quite clear at his most recent news conference that the Fed would only raise rates by a smaller amount but that the final rate would be higher.
Additionally, we learned from the minutes that the Fed officials believe there is a 50/50 risk that the US will enter a recession next year. The unemployment claims and yesterday’s PMI figures were both dismal enough to cheer up markets.
Services PMI dropped further into the contraction zone while manufacturing PMI unexpectedly dropped below 50, the contraction zone.
On the other hand, whereas October’s durable goods orders showed a better-than-expected amount, unemployment claims increased more than anticipated. The Nasdaq increased by around 1%, while the S&P500 gained about 0.60% and dropped to its lowest level since September, continuing the recent surge.
As the US currency aggressively depreciated everywhere, the yield on the US 10-year note decreased. This morning, cable is aiming for the 1.21 level after rallying past the 1.20 level.
The EURUSD has risen over its own 200-DMA, which is currently at 1.0391, and may continue to rise toward the psychological level of 1.05 in the future. The European Central Bank (ECB) minutes today won’t likely elicit the same response as the Fed’s, but because trade volumes are anticipated to be light due to the Thanksgiving holiday, we might experience significant ups and downs through the end of the week.
