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MTrading Team • 2022-11-03

Fed fuelled market fears, GBPUSD awaits BOE

Fed fuelled market fears, GBPUSD awaits BOE

Global markets bear the burden of the Fed’s hawkish hike on early Thursday even as the off in Japan and anxiety ahead of BOE chain the bears. With this, the US dollar extends post-FOMC gains while the yields grind higher.

Fears from a jump in China’s covid counts and North Korea’s missile testing joined the ongoing Russia-Ukraine and the Sino-American tussles to add extra negatives to the sentiment. Thus, the equities and commodities were depressed while Antipodeans portray bearish moves with the best fall among major currencies.

Gold drops towards the lowest levels in two weeks while Brent oil prints mild losses by reversing from the highest levels since October 10 to snap a two-day uptrend.

However, BTCUSD and ETHUSD rebound from a weekly low amid positives for the global crypto markets.

Following are the latest moves of the key assets:

  • Brent oil drops from a three-week high, down 0.40% intraday near $97.00 at the latest.
  • Gold drops for the second consecutive day as it approaches October’s low while flashing the $1,627 mark, down 0.50% as we write.
  • USD Index extends post-Fed gains to 112.50, up 0.36% intraday near a two-week high by the press time.
  • FTSE prints mild losses but Euro Stoxx and DAX are both down nearly 1.0% intraday at the latest.
  • Wall Street remained in the red for the third consecutive day with Nasdaq’s 3.36% daily fall.
  • BTCUSD and ETHUSD are both positive near $20,300 and $1,550 respectively.
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Powell powered risk-aversion ahead of Bailey’s BOE song

Although the Fed statement appeared quite in favor of slower rate hikes in the future, Chairman Jerome Powell reversed the tepid optimism by signaling readiness for more and stronger rate lifts to “decisively” tame inflation woes.

On the other hand, China’s jump in coronavirus numbers and fresh lockdowns in industrial/IT hubs joined North Korea’s multiple test-fires of missiles to push back the buyers even as Japan’s holiday challenged the bond market moves in Asia. Hawkish comments from ECB policymakers also offered negatives to the risk profile but the cautious mood ahead of the Bank of England’s (BOE) monetary policy meeting, as well as the quarterly forecasts, test the pessimists.

Elsewhere, JP Morgan’s first DeFi trade and plans to buy banks from Binance joined more transactions to favor cryptocurrencies.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: ETHUSD

⬆️ 🟢 Buy: USD Index, USDCAD, Nasdaq, EURUSD

⬇️ 🔴 Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

BOE, US ISM Services PMI are the key ahead of NFP

While the Fed has already played its card, it’s time for the BOE to entertain traders amid hopes of another 75 bps rate hike. Even so, the cable might have nothing to cheer amid economic fears in the UK, as well as the new government’s delay in publishing fiscal updates.

Additionally, US ISM Services PMI will also be watched for details about inflation and employment after the recently strong ADP Employment Change and the Fed’s move, not to forget pre-NFP.

Above all, Friday’s US jobs report will be crucial for markets to determine the near-term trend as bears are set for a long play.

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