Fed nerves keep the mood cautious
S&P500 => The index rises above 3900
BTC/USD => The cryptocurrency rises to 19k
USD/CAD => The pair holds steady at 1.3250
S&P500 futures edge higher ahead of the FOMC
S&P 500 rose 0.7% yesterday but failed to reclaim the 3900-support level in cautious trade ahead of a slew of central bank interest rate decisions. The FOMC kicks off today, with the rate decision due tomorrow. Whilst the market broadly expects a 75 basis point hike, some traders are pricing in a 100 basis point hike after last week’s hotter-than-expected US inflation data. Geopolitical tensions also remain in focus as Biden hinted toward supporting Taiwan should China invade and as Putin and as Putin and China’s Xi Jinping meet for the first time since the start of the war. Today trading is likely to remain cautious, with few prepared to take on big positions ahead of tomorrow’s interest rate announcement.
Where next for S&P500?
The S&P500 fell below its rising trendline support to 3830 before attempting to rebound higher. The index notably closed below the key support turned resistance, which, combined with the bearish RSI, keeps sellers hopeful of further downside. Sellers must break below 8333 to extend the bearish trend towards 3800, the May 20 low. Meanwhile, sellers could be encouraged by the long lower wick on the candle, suggesting little acceptance at the lower levels. Buyers will look for a move over 4000 psychological level and 20 sma for further gains.
BTC, ETH rises as the FOMC 2-day meeting begins
Cryptocurrency prices steadied on Monday, with BTC/USD rising from the 3-month low of 184000 and trading back above 19000 at the time of writing. Cryptocurrencies and, more broadly, risk assets have had a rough ride as investors fret that more aggressive rate hikes from the Federal Reserve and other global central banks will spark a global recession. The market is undoubtedly cautious, with a slate of major central banks, including the Fed, set to announce interest rate decisions this week. The Fed is widely expected to hike rates by 75 basis points on Wednesday for a third consecutive meeting. We can expect trading to be relatively muted from here to the Fed’s rate announcement.
Meanwhile, ETH/USD has retaken 1400, up 8% from its low of 13000 reached on Monday, although the mood towards Ether post-merge has remained cautious. The Merge hasn’t proved to be a magnet for buying interest. Interestingly, while ETH funds recorded outflows for a fourth week, Bitcoin won inflows. This and the sharp sell-off in ETH/USD following the Merge suggest that investors have not yet been won over. While the price has edged higher, the trend is convincingly downwards, and you have to be brave to try to catch a falling knife.
USD/CAD looks to Canadian inflation data
USD/CAD fell 0.05% yesterday after briefly rising to 1.3350, an almost two-year high. The USD gave up earlier gains as investors looked ahead to the Federal Reserve monetary policy meeting, which begins today. Meanwhile, the Canadian dollar edged higher as wholesale inflation slipped for a third consecutive month. Today Canadian inflation remains in focus, with the release of the Canadian consumer price index, which is also expected to show a cooling in prices, which could prompt the BoC to adopt a slightly less hawkish stance on monetary policy, pulling CAD lower. The US economic calendar sees the release of housing starts and permits, which come amid signs that the housing sector is cooling as interest rates rise.
|CAD CPI YoY Aug.||Expected: 7.3% (0.6%)||Previous: 7.6%|
Support can be found at 1.3230 (July 14 high) and 1.30 (psychological level).
Resistance for the pair can be seen at 1.33 (round number) and 1.3345 (2022 high).