In the meantime, a goodish recovery in crude oil prices seems to underpin the commodity-linked loonie and acts as a tailwind for the USD/CAD pair. Spot prices, however, manage to hold above the 1.3800 round-figure mark as investors prefer to stay on the sidelines and brace for the crucial US consumer inflation figures. The USD/CAD pair struggles to capitalize on its modest intraday uptick and retreats a few pips from the daily high touched during the early European session. USD/CAD trims a part of its modest intraday gains, though the downside remains cushioned.Ī goodish bounce in crude oil prices underpins the loonie and acts as a headwind for the pair.Īggressive Fed rate hike bets continue to lend support as traders await the key US CPI report. History knows examples of when the market failed to generate returns for decades, but market participants still hope that regulators will not let that happen this time. The fundamental principle that stock prices “only go up” in the long term will be called into question, as it was with the housing market 12 years ago. The 200-week moving average now passes near that mark, a decisive dip below which would force markets to rethink the entire paradigm of the past decades.
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News about stronger-than-expected monthly PPI growth and the hawkish tone of the FOMC minutes did not cause the US indices to update their multi-month lows.On the contrary, the Nasdaq100 has posted higher intraday lows, and the index futures are adding 0.3% since the start of the day on Thursday, experiencing an influx of buyers on declines towards 10700.The S&P500 is getting apparent support on the declines under the 3600 mark since the beginning of October. It may well be that too much negativity is already embedded in prices. This is a striking addition to Powell’s words that we need to “embrace economic pain”.Surprisingly, financial markets took the minutes very neutrally. In central banker’s language, such a statement indicates a willingness to tighten conditions until business begins to bear significant losses by reducing the number of job openings and halting wage growth.At the same time, the Fed admits that the unemployment rate could rise above the currently projected 4% - a significant increase from the current 3.5%, suggesting job cuts. The reaction adds to the picture that rather negative expectations are priced in.The FOMC is convinced that even more restrictive policy is needed because the slowdown of inflation is slower than predicted, and there is still upward pressure on prices due to the tight labour market. The comments, whilst not allowing the markets to develop a rebound from the multi-month lows, did not come as a shock either. The release of meeting minutes from the FOMC Meeting on September 20-21 produced another round of hawkish rhetoric from the world’s top central bank.
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