Hawkish FOMC doesn’t change much

Wednesday was all about the FOMC December 13 & 14 meeting minutes. The market sees them as slightly hawkish, the main headline being Fed officials foreseeing higher rates for ‘some time’ ahead. Overall, not much change was seen with indices and stocks but there was a small boost to the American Dollar that was much needed, as before the Minutes, USD was pretty much going down the whole Wednesday.

Apart from the FOMC Minutes, we had other key data published in the US. The first one was the ISM Manufacturing PMI, which came in line with what was anticipated (48.4 vs 48.5). In addition to this, we also got the JOLTS Job Openings who positively surprised us with 10.46M vs 10.04M expected. What is more, we had a positive revision of the number from the previous months, which was finally estimated as 10.51M.

Another key headline from yesterday were the supposed layoffs, particularly in Amazon and Salesforce. Amazon is planning to cut around 18000 positions and Salesforce aims at firing 7000 employees, which would mean around 10% of their workforce. It sounds like companies are bracing for a recession in 2023.

In general, indices rose yesterday with the SP500 finishing 0.75% higher and Nasdaq climbing up 0.48%. Today, indices are returning some of those gains with most of the futures being on the red side of the market.

The currency market is calm. Surprisingly, the strongest one today is the Swiss Franc. The weakest one is the GBP but those movements do not have any strong technical significance. The most important moves on the FX are currently happening on the USDJPY which is bouncing off the key support on the 131. We have also a clear rise in the EURGBP, which may be ending the two-week-long sideways trend.

A lot is happening on the commodities. Oil kicked off 2023 with two ugly bearish days. Yesterday, we saw a 5% decline, which is not pretty common. Thursday starts with a small correction but the sentiment is definitely negative. Metals are down today but, overall, they are in a bullish trend, so today’s drop can be considered a normal bearish correction and should not harm the buyers at all.

Today’s calendar does not have much juice in it but traders should be watching the ADP Non-Farm Employment Chance published before the start of the American session. 152K is expected, which would be an increase from the previous month of 127K.