Indices, Commodities and Dollar Firm Ahead of FED’s Decision

Wednesday is all about the FED’s rate decision but before we get there, let me show you what’s driving the market right now. Yesterday’s calendar wasn’t really busy. The leading data was the CB Consumer confidence, which happened to be slightly worse than expectation but it didn’t have a real impact on the markets.

The numbers that many were waiting for were earnings from Google and Microsoft, which were published after the market close. Both were worse than expectations; Microsoft EPS came 2,23 vs expected 2,29 and for Alphabet (Google) the numbers were 1,21 vs the expected 1,28. In after hours trading, both shares are trading higher, why is that? Well, the first explanation is that after terrible results from Snapchat, traders were worried that we could actually get a huge miss in data for Google as well. This didn’t happen, so it looks that we’re good. Markets work in twisted ways.

Overnight, Australia published the CPI data, which came in line with expectations. Hours after the publication, the Australian Dollar remains pretty unchanged as it is often the case with data that comes as expected.

The elephant in the room today is the Federal Reserve’s (Fed) interest rate decision. Markets are expecting a 75 bp raise. Ahead of the decision, the USD remains strong. The EURUSD is close to local support at 1.012 and the USDJPY is at the highest levels this week. Buckle up, a festivity of volatility and momentum is coming.

Let’s come back to earnings season. Today, we’ll have numbers from Meta (Facebook), Qualcomm, T-Mobile, Boeing, Rio Tinto, GSK and Airbus. Meta will publish earnings after the session, when we’ll still be digesting the Fed’s decision, how exciting!

Wrapping up, interestingly, oil and gold are finally moving in one direction – up. For oil it’s because it’s finishing the right shoulder of the inverted head and shoulders pattern, and for gold it’s because of the continuation of the bounce from the 1690 USD/oz support. Let’s see how those two will handle the Fed’s decision later today.