All quiet ahead of the Fed’s interest rate decision later today. There has been a last minute pivot away from predictions of a 25 basis point cut in favour of a more bold 50 bps reduction in the target rate. FedWatch is now pricing the larger cut at a 65% probability. The reasons for the shift aren’t clear and markets have been very timid so far this week, so no clues there.
The Dow Jones edged out another record high on Monday after a 0.55% rise, but overall US indices are in wait-and-see mode until the Fed makes up its mind. The same can be said for currencies; the Dollar fell on Monday, with the DXY losing the 101 level, only to reclaim it the following session. Traders can expect some degree of volatility both before and after the announcement, by the looks of things a lot of market participants are staying out of the game until then.
Gold also eked out another record high on Monday, climbing a few Dollars just for the sake of it before closing half a percent lower on Tuesday. Oil has finally showed some strength, with Brent and WTI up around $5 a barrel since last week’s lows, although once again there doesn’t appear to be an obvious reason as to why. It will be interesting to see how cryptocurrencies react to the Fed interest rate decision later today. Crypto markets have been uncharacteristically boring recently, with BTC hugging $60k and Bitcoin dominance at yearly highs of 58%.
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