Market Drivers -US Session 28/10/2022

Mohamed Abdelhamid 29 October, 2022 3:45 am Forex Market, Market Update

The US Dollar Index, a gauge of the buck’s value vs. a basket of its rivals, advances 0.30% at 110.895. Market participants turn to the next week’s Open Market Committee (FOMC), in which most analysts expect the Fed to hike rates by 75 bps. However, December’s meeting is split between 50 or 75 bps, with the majority of the investors.

It is noteworthy that macroeconomic data failed to provide a clear direction for the US dollar. US personal spending beat expectations, confirming that consumption, one of the main contributors to US GDP, has remained resilient in spite of the soaring inflation levels.

On the other hand, private wage growth has slowed down in the third quarter, suggesting that inflation might be nearing its peak, which would be consistent with the idea of the Fed softening its rate hike path.

Economic Data

Friday’s action was dominated by a better-than-expected reading on inflation. The core Personal Consumption Expenditure Index, which is the Fed’s preferred measure of inflation, gained 0.5% month over month in September. That was just below economists’ expectations, and fueled hope that the central bank could slow down its pace of interest rate increases.

In addition to inflation data, the University of Michigan Consumer Sentiment, on its October final reading, remained unchanged at 59.9, while inflation expectations barely moved. According to the survey, one-year horizon inflation is estimated at 5% from 5.1%, while for 5-years is estimated at 2.9%.

Other Developments

Stocks ended the week with positive performance on Friday, finishing sharply higher after some economic data raised the possibility of a slower pace of rate hikes by the Fed.

The blue-chip Dow Jones Industrial Average soared 2.6% to finish at 32,861, while the broader S&P 500 jumped 2.5% at 3,901. The tech-heavy Nasdaq Composite vaulted 2.9% to end at 11,102.

Friday’s session made for a positive end to a unrestrained week of mixed trading driven by disappointing quarterly reports from the biggest technology companies. On Friday, it was Amazon.com’s -6.8%) turn to take a dive, as shares fell after the e-commerce giant gave a downbeat revenue forecast for the holiday shopping season.

Google parent Alphabet, Facebook parent Meta Platforms and Microsoft; all delivered discouraging results earlier in the week.

Friday’s risk-on impulse has kept safe-haven, including gold, under relative pressure.

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