23/05/2024 - 08:08 UTCThe U.S. dollar gained for yet another session on Wednesday, with the dollar index (USDX) adding another 0.29% to its value and breaking above the range it was trading in the past week. Federal Reserve officials sounded more hawkish-than-expected in the minutes of the Fed’s latest policy meeting, with some officials even revealing a willingness to raise interest rates due to concerns that inflation might not decline as quickly as hoped.
Following recent Fed developments, expectations for the first rate reduction have shifted from September to November with CME Fedwatch tool showing bets for September dropping to 49.7% while November rose to 47%.
On the energy front, the two main benchmarks WTI and Brent were down by more than 1%, declining for a fourth consecutive session following Fed remarks indicating that monetary tightening is back on the table and indications that OPEC+ will not cut production as much as expected in the third quarter of this year. On another note, geopolitical tensions are intensifying as China's military started two days of "punishment" drills held in five areas around Taiwan just days after new Taiwan President Lai Ching-te took office.
Wall street seems to be riding a new wave of optimism this week, with both the US 500 and the US tech 100 recording new all-time highs, ahead of key earnings reports from the US and amid persistent strength in technology stocks. Nvidia reported upbeat guidance on Wednesday, regarding the current quarter as first-quarter results exceeded forecasts, driven by robust AI-led demand in its data center business and the chipmaker also announced a ten-for-one stock split. According to reports, NVIDIA stock price jumped by more than 5% in afterhours trading following the report.
For Thursday, investors focus could turn to a series of manufacturing and services PMIs from the eurozone, the U.S. and the U.K. while later in the session, some price action could be seen upon the release of eurozone consumer confidence, US new home sales, jobless claims and
The EUR/USD pair knocked lower on Wednesday ending the session with losses of 0.27% after the Federal Reserve’s latest Meeting Minutes revealed the Federal Open Market Committee (FOMC) are grimly determined to wait for more proof inflation will ease to 2%, sending risk appetite lower as rate-cut-hungry investors keep hoping for dovish signs from the US central bank.
Odds of a September quarter-point rate cut have eased to 60% according to the CME’s FedWatch Tool.
On Thursday, European Purchasing Managers Index (PMI) data is expected to recover. US PMI figures will follow during Thursday’s US market session.
Gold prices dipped over 1% on Wednesday as traders pulled back from bets on Federal Reserve's rate cuts this year.
Federal Reserve officials indicated that it would take longer than previously anticipated to gain greater confidence in inflation moving to 2%, according to the minutes of the U.S. central bank's April 30-May 1 session.
Lately, economic data has pointed towards a downtrend in inflation, but U.S. central bank policymakers said that the Fed should wait several more months to ensure that inflation really is back on track to its 2% target before cutting interest rates.
Oil prices settled lower Wednesday for a third consecutive day as an unexpected build in U.S. inventories cast doubt over demand in the world's largest crude consumer.
Data from the Energy Information Agency showed Wednesday that U.S. oil inventories grew by 1.8 million barrels last week, confounding expectations for a 2.4M barrel decline.
The unexpected build in inventories raised some concerns over sluggish U.S. oil demand, especially ahead of the upcoming Memorial Day holiday, which traditionally marks the beginning of the summer driving season. with regards to fuel consumption.
Also weighing on sentiment were concerns after the minutes of the Federal Reserve’s Apr. 30-May. 1 meeting released Wednesday, showed Fed members were concerned about stalling disinflation.
U.S. stocks fell on Wednesday as investors digested minutes of the Federal Reserve's most recent meeting, but Nvidia shares rose about 6% after the close on the semiconductor bellwether's stronger-than-expected revenue forecast. US Tech 100 rebounded and ended the session with gains.
NVIDIA Corporation rallied as much as 6% in aftermarket trade, reaching a record high of $1,006.95 a share after its first quarter earnings blew past estimates. The firm also offered up a stronger-than-expected revenue forecast for the current quarter, as it continued to benefit from strong demand in the growing AI industry.
On the other hand, the minutes of the central bank’s meeting cemented fears that the Fed was growing less confident that inflation was moving sustainably back towards its 2% annual target.
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