There is a threat of ECB and Fed rate increases amid technological flaws, battering the US dollar. Ahead of next week's Federal Open Market Committee (FOMC) meeting, the market seems to be expecting a less hawkish Federal Reserve, which caused the US dollar to suffer overnight.
Markets for futures and swaps are pricing in a 75 basis point increase at the Fed meeting next Wednesday and a 50 bp increase at the gathering in December.
Some analysts are optimistic about the rate peak that will occur next year; at the moment, that peak is being priced in for the second quarter. The benchmark 10-year note has fallen below 4%, and Treasury rates have decreased across the curve.
In advance of that, market pricing and economist predictions indicate that the European Central Bank (ECB) will increase rates by 75 basis points later. As is the case for the majority of pairings versus the US Dollar, EUR/USD has maintained gains during Asian trade thus far.
Even USD/JPY remains stagnant, trading near 146 after a week that was eventful and probably included selling by the Bank of Japan on Monday.
The small budget crisis appears to be firmly in the rearview mirror as GBP/USD is trading back up to levels last seen in mid-September.
Less below the 75 bps anticipated, the Bank of Canada (BoC) increased its overnight lending rate by 50 bps. Initially soaring higher on the news, the USD/CAD eventually returned to its starting level.
After Alphabet, Apple, Microsoft, and Microsoft all underwhelmed expectations over the past few days, the sour sentiment in tech names has been exacerbated by Meta and Samsung's publication of results that fell short of expectations.
The Nasdaq 100 fell 2.04% during the cash session, but futures indicate that it will start the day steadily, along with the other major Wall Street indices. In a context of rising interest rates, like the one currently in play, tech stocks may seem particularly susceptible.
With the exception of Hong Kong's Hang Seng Index, APAC equities have been comparatively quiet (HSI). It has recovered some of the significant losses from earlier in the week with a 2% comeback today.
The idea to control the price of Russian oil has been revised by the Biden administration, but the specifics have not yet been fully worked out. At the time of publication, the WTI futures contract is trading at US$ 88 barrel, while the Brent contract is trading around US$ 96 bbl.
GDP, durable goods, and jobs statistics will be released in the US following the ECB's rate announcement.
A US Dollar index called the DXY is weighted against the following currencies: EUR (57.6%), JPY (13.6%), GBP (11.9%), CAD (9.1%), SEK (4.2%), and CHF (3.6%).
This week, the DXY index fell after breaching a short-term ascending trend line. It continues to be contained within the larger upward trend channel.
Support might be found at the following ascending trend line, which also happens to be the 100-day SMA, which is now approaching 108.40.
Resistance on the upside might be found at the break points of 110.06, 111.47, and 111.77.
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