Bulls Retreated As The Feds Target Higher Rates

STATE OF THE MARKETS

Bulls retreated as The Feds target higher rates. US stocks continued to drift lower on Wednesday after the Federal Reserve hike rate 50 points as expected but raised its target rates higher from 4.6% to 5.1% in 2023. The blue chip Dow (-0.42%), S&P (-0.61%) and Nasdaq (-0.76%), including Russell (-0.65), all edge lower as yields float in a tight range. The shorter 2Y remained above 4.21% while the 10Y benchmark eased a little lower to 3.48% as the Dollar index found support at the 103.50 mid handle.

In the commodity markets, crude oil continued to climb for the third day after OPEC’s report of growing demand from China in 2023 as the country eased on its Covid policy. The black gold settled around $77.40/bl as New York closed.  Higher target rates sent gold below key level $1,800/oz and the metal is trading below $1,780/oz as at writing. Elsewhere, iron ore continues to stall around $109.20/tn as investors wait for the next catalysts.

In the FX space, short term traders and medium term accounts turned bearish as demand for safe haven Swiss jumped alongside Euro, Dollar and Sterling though Yen eased to offer. However, long term investors seemed more bullish as Sterling overtook Yen in demand, while Kiwi continued to reign.

On Thursday, markets may remain choppy as long term investors look to cash out on further rally in equities while short term traders may look to scoop some bargains as players continue to weigh Fed’s decision on the new target rates. Other than US jobless claims, Philly Fed’s manufacturing index and retail sales, it’s a thin Thursday as only Jabil (JBL) and Adobe (ADBE) are scheduled for earnings release.

G8 CURRENCIES SENTIMENTS

** ST refers to Short-Term daily turnover, MT is Medium Term weekly 
and LT refers to Long-Term monthly turnover.

WALL ST MOST ACTIVE

** % Change here refers to price vs previous day price

WALL ST TOP FLOWS

** % change here refers to volume vs. 20 days average volume.

TOP 5 BLOCK ORDERS

OUR PICK – XAU/USD

Playing the pullback. Gold is currently being repriced as the target rates increased to 5.1% from 4.6% in September. We expect a pullback to 50% retracement, circa $1,720, though deeper pullback to 61.8% could not be ruled out at his point as $1,700 is a major handle where we expect large orders to support the metal.

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