Fed Interest Rate Decision to Drive USD, Stocks and Gold

Fed’s interest rate decision to dominate the markets

The USD tumbled across the board yesterday as US President Trump stated yesterday that the value of the dollar was “great”, implying a preference to a weaker USD in the FX market, adding pressure on the greenback which hit a four-year low. Today the highlight is expected to be the Fed’s interest rate decision. The bank is widely expected to remain on hold, keeping rates at the 3.50%-3.75% range. Hence, we expect the market to shift its attention to the bank’s forward guidance and should the bank signal that it intends to remain on hold for longer, we may see the USD getting some support while gold’s price and US stock markets could lose ground. Yet we have to bear in mind that the decision is being taken within a wider frame than just monetary policy as Trump is exercising pressure on the bank to ease its monetary policy extensively, and at the same time he is about to name the replacement of Fed Chairman Powell, both of which tend to weigh on the USD.

BoC also expected to stand pat

Earlier in the American session we also get from Canada BoC’s interest rate decision. The bank is widely expected to remain on hold while CAD OIS also currently imply that the market expects the bank to keep rates unchanged until the end of the year. A forward guidance by the bank possibly leaning on the hawkish side could provide support for the Loonie as it could enhance the market’s current expectations.

Earnings, Meta, MSFT, Tesla, AT&T,

Today we note the release of the earnings reports of AT&T and Tesla, the latter we mentioned yesterday, we highlight Microsoft and the market’s interest is also to be placed on the company’s forward guidance about the Azure AI growth and cloud performance, while for Meta we note the market’s worries for AI spending concerns which tend to raise some eyebrows on whether they will be yielding the hoped results.

Charts to keep an eye out

USD/CAD is expected to be hit with a double whammy today given BoC’s and the Fed’s interest rate decisions. The pair tumbled for the past week and in today’s Asian session hit a floor at the 1.3550 (S1) support line, stabilizing somewhat for the time being. We maintain a bearish outlook for the pair given its intense downward motion yet issue also a warning for a possible correction higher as the pair seems to have reached oversold levels. Should the bears remain in the driver’s seat, we may see USD/CAD breaking the 1.3550 (S1) support line and start aiming for the 1.3420 (S2) support level. For a bullish outlook which we consider as remote at the current stage, we would require the pair’s price action to reverse direction, break the 1.3720 (R1) resistance line and continue even higher by breaking the 1.3880 (R2) resistance barrier.

Microsoft’s share price has been on the rise for the past four days aiming currently for the 490 (R1) resistance line. We note the emerging bullish intentions given also that the RSI indicator has just surfaced above the reading of 50, yet note that the bullish market sentiment for the share’s price is still weak. Should the bulls maintain control of #MSFT’s share price action, we may see it breaking the 490.00 (R1) resistance line, placing practically the 512.00 (R2) resistance level in its sights. For a bearish outlook to emerge we require #MSFT’s share price to break the 465.00 (S1) support line and continue to also break the 439.00 (S2) support level.

その他の注目材料

Today we get Germany’s GfK consumer Sentiment for February, from the US EIA weekly crude oil inventories figure, and later on New Zealand’s December trade data, while ECB Board Member Schnabel speaks. On Thursday, we get New Zealand’s business outlook for January, Japan’s Consumer Confidence for January and later on Sweden’s preliminary GDP rate for Q4 25.

今週の指数発表：

In the current week the highlight is expected to be the Fed’s interest rate decision on Wednesday. The bank is widely expected to remain on hold, keeping rates at 3.50%-3.75% range. Hence we expect the market to shift its attention to the bank’s forward guidance and should the bank signal that it intends to remain on hold for longer, we may see the USD getting some support while gold’s price could lose ground. Also on Wednesday we get from Canada, BoC’s interest decision, while on Friday EUR traders may be more interested in the release of Germany’s, France’s and the Euro Zone’s preliminary GDP rates for Q4 25.