Fed Holds Rates Steady; Stocks Surge, Dollar Dips

The Federal Reserve again keeps rates at 5.25%, resulting in the stock market rising for a third day. However, the Fed Chairman dismisses the idea that future interest rate hikes are impossible. Nonetheless, US bond yields retrace downwards, and the US Dollar declines, supporting the US stock market. Most economists believed the Federal Reserve would keep rates unchanged on this occasion, but December’s meeting is less specific. According to the CM FedWatch Tool, the possibility of a rate hike in 41 days is 20%. However, if employment data and the inflation rate reach higher than expected, the chances of a hike will rise. If the possibility increases, the stock market will witness selling pressure and the Dollar may again rise. 

The US Dollar Index rose in value on Tuesday and Wednesday but came under significant pressure after the Federal Reserve’s decision. This morning, the Dollar index declined by a further 0.50% and is the worst-performing currency of the day. The best-performing currency is the Euro. However, investors should remember that the Bank of England will announce their interest rate decision this afternoon. If the Bank of England’s monetary committee votes differently, the Pound's price will likely be volatile. 

NASDAQ

The NASDAQ was the best-performing US-based index due to its higher exposure to growth stocks and the technology sector. In addition to the dovish move from the Federal Reserve and the retracing of bond yields, earnings reports from the companies largely supported the index the index is most exposed to. The latest being Qualcomm and AMD, which both performed better than Wall Street analysts had expected. This evening, institutional investors will primarily focus on the release of Apple’s quarterly earnings report. Investors should note that Apple is the most influential stock within the NASDAQ 100.  

Analysts expect Apple to confirm an Earnings Per Share figure of $1.39, higher than the previous quarter. The company revenue is also expected to read higher. However, investors will also be monitoring the performance of each sector of the company. Previously, this has pressured the stock regardless of the higher earnings and revenue. If the company confirms higher earnings and revenue, along with a positive outlook for the next quarter, the stock will likely rise. This would also support the price of the NASDAQ as Apple stocks make up 11% of the index. Apple stocks rose 1.87% in yesterday’s session and a further 0.95% this morning. 0.95% before market opening is known to be a significant price movement considering trading is closed. 

As mentioned above, Qualcomm and AMD are some of the key reasons behind the recent upward trend. Qualcomm has risen almost 6% over the past week, while AMD has risen more than 12.50%. AMD Earnings Per Share read 4% higher than expectations, and revenue rose 7% since the last quarter. Qualcomm’s report also showed higher earnings and revenue. 

NASDAQ 1-Hour Chart on November 2nd 

The index's price trades above the main trend lines and the VWAP in technical analysis. However, the price is also overbought on most oscillators and at the previous resistance level. Therefore, traders note the upward momentum but are still cautious of potential corrections. 

GBP/USD

The Pound against the Dollar is increasing in value but is still struggling to obtain medium to longer-term bullish signals. This is mainly due to the exchange rate's inability to form higher highs. Therefore, even when bullish momentum is seen, the GBP/USD does not create more than a descending triangle, which is still technically a downward indication. However, this may change this afternoon once the Bank of England releases its rate decision. 

Market participants are awaiting the outcome of the Bank of England’s monetary policy meeting, which will take place today at 14:00 (GMT+2). According to forecasts, the interest rate will be kept at 5.25%, and seven of nine board members may support this decision. The decision is unlikely to be different from that expected. However, the votes may cause volatility if not all nine members keep this. The committee votes are deemed to be strong indications of future decisions. Meanwhile, the pound was supported by the October house price index from the Building Society Nationwide, which added 0.9% after 0.1% earlier, ensuring an annual increase in the indicator from -5.3% to - 3.3% and manufacturing PMI over the same period adjusted from 44.3 points to 44.8 points.

GBP/USD 30-Minute Chart on November 2nd