The tech bloodbath is over and Wall Street still appears confident that the Fed is ready to scale back its pace of tightening after delivering a fourth consecutive 75 basis point rate hike next week. The labor market needs to weaken significantly before the Fed can have a slower pace of tightening. This Apple-led rally is somewhat surprising given the lackluster results and holes in the outlook. When you compare Apple’s revenue to Meta and Amazon, it looks much better.

US data

Another round of economic data supported the argument that price pressures aren’t easing fast enough and the Fed may need to stay aggressive with tightening. The Employment Cost Index (ECI) came in at 1.2% in the third quarter, still well above pre-pandemic levels. Core PCE inflation data is not cooling yet, which could make it difficult for policymakers to push lower on the tightening next month.

The consumer is also resisting as personal income and spending data remain positive. The US consumer sentiment report showed a small uptick, while inflation expectations remain high.

Next week will be massive and traders shouldn’t be surprised if the Fed shirks away from committing to taking sides in the debate for a downgrade for the December meeting.

Oil

Oil markets remain volatile as China intensifies COVID restrictions, some US oil giants report modest commitments to increase production and the global economic outlook continues to darken. Next week, energy traders will have a better idea of ​​how the Chinese economy is performing despite the COVID lockdowns that occurred in October. OPEC will also announce its world oil outlook on Monday.

WTI crude is also feeling heavy as the strong dollar trade could return as Treasury yields resume their ascent.

Broadly speaking, commodities will also react to the FOMC policy decision and next week’s nonfarm payrolls report. A rise in dovish rates could allow for dollar weakness which could keep oil prices supported here. If risk appetite remains healthy, WTI Crude could continue to consolidate above the $80 mark.

Gold

Gold prices eased after another round of US data failed to support calls for the Fed to scale back tightening in December.

The bullish case for gold is improving as financial markets begin to turn optimistic that the Fed will begin to deliberate on a slower pace of tightening. Gold could be on the verge of a major breakout if the FOMC decision is supported by the nonfarm payrolls report at the end of the week. Gold has initial support at $1640, with the line in the sand at $1620. The $1680 level offers major resistance for gold followed by the $1700 level.

Cryptos

Bitcoin is trading around the $20,000 level as many investors wait to see what will happen with next week’s market reaction to the FOMC’s decision. What will also attract additional attention is Hong Kong Fintech Week, which includes appearances from FTX’s Sam Bankman-Fried, but may contain more information on how Hong Kong will provide guidance on how the crypto retail might be allowed. Zhao, CEO of Binance, and Cathy Wood of Ark will speak at the Web Summit in Lisbon.

This article is for general information purposes only. It is not investment advice or a solution for buying or selling securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for everyone. You could lose all your deposited funds.

With over 20 years of trading experience, Ed Moya is a senior market analyst at OANDA, producing up-to-the-minute cross-market analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. . His particular expertise covers a wide range of asset classes, including currencies, commodities, fixed income, equities and cryptocurrencies. During his career, Ed has worked with some of the major forex brokerages, research teams and information services on Wall Street, including Global Forex Trading, FX Solutions and Trading Advantage. Most recently, he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks, including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His opinions are endorsed by the world’s most renowned news agencies including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.

Ed Moya
Ed Moya