Today the FOMC is scheduled to convene, and the market awaits in anticipation for the first interest rate decision of this year from the Federal Reserve. The central bank has scaled down its interest rate magnitude to 50 basis points in December, after four straight 75 basis point increases and now the market foresees a 25-basis points hike. The view for a less hawkish approach stems from updated data indicating that inflationary pressures are abating, a robust employment market and better than expected growth results of the past quarter, alongside the explicit comments from some officials who favor a downshift. The increase by 25 basis points would bring the key policy rate to 4.75%, shy of 50 basis points from the terminal rate of 5.25%, indicated in the December\u2019s dot plot graph. Market participants however, have increased their speculative bets throughout January forecasting that the central bank will not push rates as far as 5.25% and will be forced to cut rates around the start of the third quarter, as they anticipate that inflationary pressures will dissipate faster than expectations and the US economy will enter a \u201cmild\u201d recession. Since the market has almost fully priced in 25 basis points rate hike according to the FFF, the crucial aspect of the meeting is now the speech of Fed Chair Powell, alongside the forward guidance contained in the accompanying statement. Should there be a signal that the central bank is close to the end of its tightening cycle, the market may interpret that as dovish and we may see the dollar depreciate and in contrast, equities extend their climb to higher ground. Should however, we hear Fed Chair Powell push back on the narrative for looser financial conditions, adopting an unwavering hawkish stance, we may see the dollar strengthen and US stock markets move to the south.<\/p>\n\n\n\n
Earnings roundup and upcoming releases<\/strong><\/p>\n\n\n\n Even though, the Fed\u2019s interest rate decision has the capacity to overshadow and outright dominate the direction of US stock markets, equity traders nonetheless continue to assess the earnings results of high-profile blue-chip companies. Yesterday, all three major US stock market indices, namely the Nasdaq 100, S&P 500 and Dow Jones 30 were on the rise, buoyed by speculations that the Fed will ease its monetary policy stance but also from upbeat earnings results by General Motors (#GM), Advanced Micro Devices (#AMD), UBS (#UBS), ExxonMobil (#XOM) and Pfizer (#PFE) among others. Earlier today, Snap (#SNAP) earnings
disappointed, and its share price was down by -14% in the pre-market session. Equity traders now shift their attention towards the earnings results of the tech giant Meta Platforms (#META) and China\u2019s e-commerce behemoth Alibaba (#BABA). Furthermore, tomorrow\u2019s earnings calendar is also packed with prestigious names such as Apple (#AAPL), Alphabet (#GOOG) and Amazon (#AMZN), alongside Ford (#F), Starbucks (#SBUX) and Shell (#SHEL), which are expected to keep traders on their toes.<\/p>\n\n\n\n
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