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20/03/2024 - 08:40 UTCThe US Dollar posted little change on Tuesday, with the dollar index (USDX) showing a slow and steady increase, ending Tuesday’s session 0.24% higher. Dollar traders appear to remain on the sidelines ahead of the Federal Reserve monetary policy meeting where the central bank is widely expected to keep rates on hold for now, with investors currently pricing in less than three cuts of 25 basis points each in 2024.
Still, markets maintained their bets slightly above 60% that the Fed will have enough cause to begin cutting rates by June, according to the CME Fedwatch tool. Investors are cautious as to the rate cut outlook since according to Fed comments that could change based on the path of inflation.
In Wall Street, sentiment remains strong as all three main indices ended higher once again on Tuesday, trading right below record highs as investors appear optimistic regarding the interest-rate outlook ahead of the Federal Reserve meeting this week. In December, Fed members projected three cuts for this year, but some believe that could be reduced to two or less.
In corporate news Shares of Samsung Electronics Co Ltd surged on Wednesday after reports said artificial intelligence major NVIDIA Corporation was testing high bandwidth memory chips from the South Korean conglomerate. In addition, a series of key players will be reporting their earnings this week, among which are Biontech, Pinduoduo, Micron, FiVe BELoW, Chewy, Accenture, Lufax, Nike, FedEx, Lululemon and Athletica
In today’s session, some price action could be observed upon a speech by ECB president Lagarde at the ECB and its Watchers Conference, in Frankfurt, upon eurozone investor confidence data and later in the day, the focus will most likely shift to the FOMC statement, and the press conference and economic projections that will follow. On the energy front, investors will be watching closely the weekly EIA inventory numbers.
The Euro remained on the defensive against the US Dollar as market participants await March’s monetary policy decision later today. The pair posted losses of 0.11% on Wednesday.
The US economic docket showed the housing sector is gathering steam. US Building Permits in February grew 1.9% and at the same time, Housing Starts for the same period exceeded estimates of 8.2%, increasing by 10.7%.
On the Eurozone’s front, Germany published the March ZEW Survey, which improved the country to 31.7, while the EU one surged to 33.5, beating estimates.
The European Central Bank (ECB) President Christine Lagarde is set to speak on Wednesday, and the European Commission will release its flash Consumer Confidence report for March. The FOMC monetary policy meeting will take centre stage later today. After the meeting, the attention will turn to Powell’s press conference, which might provide information on the central bank's outlook.
Gold prices retreated on Wednesday ending the session 0.23% lower as the dollar strengthened a day before the Federal Reserve signals its interest rate stance at the end of the U.S. central bank's two-day policy meeting.
Higher inflation prompts the Fed to keep interest rates elevated, weighing on non-yielding gold. Although the Fed is widely expected to hold rates steady on Wednesday, the market is awaiting comments from Fed Chairman Jerome Powell afterwards for its latest rate outlook.
Oil prices settled higher Wednesday, driven by optimism about tighter markets this year following softer exports from Iraq and Saudi Arabia.
Oil prices have surged over the past week as signs of increased U.S. refinery activity, improved Chinese demand and persistent disruptions in the Middle East presented a tight outlook for oil markets. It remains to be seen whether China can carry this momentum into the coming months, especially as consumer spending still remains weak.
The American Petroleum Institute announces its estimate of U.S. crude inventories later in the session.
Wall Street's three major indexes closed higher on Wednesday after shares in hotshot chipmaker Nvidia shook off early losses and investors looked ahead to the Federal Reserve's policy meeting conclusion on Wednesday for clues on interest rate policy. At the end of the session the US 500 added gains of 0.55%, while US 30 and US Tech 100 rose by 0.79% and 0.42% respectively.
Nvidia rose more than 1% after it revealed pricing and shipment plans for its hotly anticipated Blackwell B200 artificial intelligence chip, which it says could be 30 times faster than current chips.
The focus turns to the conclusion of a two-day meeting on Wednesday, with markets broadly expecting the central bank to keep interest rates on hold and the press conference by Powell will be closely watched for any cues on interest rate cuts.
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