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FOMC Minutes Send Markets an Important Message

By FxPro Financial Services Ltd (Alexander Kuptsikevich)ForexNov 24, 2022 06:12AM ET
www.investing.com/analysis/fomc-minutes-send-markets-an-important-message-200632753
FOMC Minutes Send Markets an Important Message
By FxPro Financial Services Ltd (Alexander Kuptsikevich)   |  Nov 24, 2022 06:12AM ET
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Investors were waiting for the November FOMC meeting minutes to clarify whether the committee would cut the pace of rate hikes. The minutes confirmed these expectations, but as they were primarily priced in, we did not see a strong reaction immediately after publication.

S&P500 index testing its 200-day MA
S&P500 index testing its 200-day MA

While remaining concerned about high inflation and the need for further rate hikes, the signals from the minutes further strengthened expectations that the next rate hike is likely (76% by CME's FedWatch estimate) to be 50 points.
 
Despite speculators' very measured reaction, this signal's importance should not be underestimated as it helps the market to move up after a lull, as seen in the charts of the major benchmark US markets.
 
The S&P 500 index moved up towards the local highs set on November 15. The S&P 500 futures at the time of writing are testing the 200-day moving average, a significant indicator of the long-term trend from which the stock has reversed to a decline since April. A consolidation above 4050 would be a crucial bullish victory signal, capable of setting the tone for stocks through Christmas.

The Dow Jones 30 flirting with the formal end of the bear market
The Dow Jones 30 flirting with the formal end of the bear market

The Dow Jones, the top performer against the S&P 500 and Nasdaq 100, has been trading above its 200-day average for a fortnight and is now rewriting the highs from April, having broken above the August peak, which is a significant signal of a trend change. Moreover, it is now 19.9% above the lows set on October 3, flirting with the formal end of the bear market.
 
The EUR/USD broke above 1.0400 early on Thursday, climbed above the 200 SMA and is also trying to show a break of the downtrend. Fixing the pair above that level by the end of the week, or better yet, the month could further fuel the influx of speculative capital with a position bet on a further bounce.
The EURUSD broke above 1.0400 early on Thursday
The EURUSD broke above 1.0400 early on Thursday

Separate from the tech analysis signals, we also pointed out yesterday that the US labour market is probably already losing jobs. Suppose this trend is confirmed in the official monthly report next Friday. In that case, the Fed's confidence that the committee can raise rates above 5% and hold them at that level for an "extended period" will be in question as job cuts, if they become a trend, guarantee an economic slowdown during the quarter.

The FxPro Analyst Team

FOMC Minutes Send Markets an Important Message
 

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FOMC Minutes Send Markets an Important Message

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Comments (4)
Dima Yush
Dima Yush Nov 25, 2022 5:00AM ET
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looking at charts you provided...USD Dow S&P are at the key levels and can reverse direction hard
Alexander Kuptsikevich
Alexander Kuptsikevich Nov 25, 2022 5:00AM ET
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You are right! That is why I'm concentrating on the disposition on the charts.
Bubba Born
Bubba Born Nov 25, 2022 4:17AM ET
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Stocks need to report their earnings quarterly. Let the Fed meet on the following months and set its rates based on the earnings. Work together not against each other! What is being done now just feeds the manipulators fresh meat!
Joe Rizzuto
Joe Rizzuto Nov 24, 2022 4:30PM ET
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bogus manipulation by the fed. why was Bullard a few days ago talking up higher for longer when he knew the minutes from meeting 3 weeks ago were talking about slowing the pace? garbage! the fed should meet every month. minutes should be out the next day. fed bobbleheads can say whatever they want in between.
Habibullo Maxmarayimov
Habibullo Maxmarayimov Nov 24, 2022 10:49AM ET
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