FOMC On Watch
US stocks are on watch today as we traders await the latest update from the Fed this evening. Along with the bank’s monetary policy decision and statement, the Fed will also deliver its latest set of economic forecasts, along with Powell’s post-meeting press-conference. Equities markets have been attempting to recover this week, helped by speculation that the Fed will deliver a dovish message at today’s meeting. However, futures prices are reflecting some caution ahead of the event with prices flat following a pullback from yesterday’s highs.
Bullish Stock Scenario
In terms of forecasts and expectations for today, the market’s consensus call is for the Fed to hold rates steady while delivering a dovish message and a downgrading of inflation and growth forecasts in light of recent data weakness and growing trade-war risks. If the Fed does lean into acknowledging these risks, saying the time for further easing is moving closer, stock prices should find room to rally as USD comes under fresh selling pressure.
Bearish Stock Scenario
However, if the Fed sounds too concerned over economic risks, particularly if a recession is mentioned, this could spook investors leading capital away from equities and into safe-haven assets. Similarly, if the Fed pushes back against easing expectations this will drive USD higher, weighing on stock prices near-term. As such, there is plenty of risk into today’s event though for now, we see the base case scenario as being a rally in stock prices in response to a mildly dovish message from the bank today.
Technical Views
S&P Futures
The recovery in the S&P has stalled for now into the 5,721.25 level. Momentum studies are climbing higher here meaning that if bulls can break above the level, a broader recovery towards the 5,931 level can be seen next. Downside, 5,592.50 remains the key support to watch.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.