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All Eyes and Ears on the Fed Fund Rate Announcement. Will it Shake the Market? 👂👀
27.07.2022

The spotlight 💡 turns towards the Fed as all assets are likely to be influenced in one way or another by the coming alteration in the Federal Fund Rate this evening 🌃. Yesterday, consumer confidence was released for the US as well as various earning releases. However, this has been largely overshadowed by today’s scheduled event.

📊 It is predicted that the Federal Reserve 🏛️ will opt to increase interest rates by 75 basis points for the second time, while other economists believe the central bank may even increase interest rates by 1%. So far most of the market has priced in an alteration of 75 basis points, but all traders will be watching closely for any surprises. In addition to the rate alteration, the market will be looking for any further indications on how the central bank is likely to proceed over the coming months 💭.

👂👀With a rate hike of 75 basis points, the Federal Fund Rate will climb to 2.5% which is the highest it has been since 2020. However, according to most economists, the Fund Rate would have to increase to 3.5% as a bare minimum in order for the monetary policy to have an effect on demand and inflation.

EURUSD

EURUSD - 27.07.2022.jpg EURUSD 4-Hr Chart on Wednesday, July 27th.

💵 The EUR/USD this morning has slightly climbed towards the previous day’s price range but still remains lower than yesterday’s average price. If we look solely at the latest impulse wave, we can see that the price has attempted to continue its downward trend and today’s upward movement is so far forming only a retracement.

The market will be monitoring closely as the European and UK trading sessions open. However, the main price driver will be the Fund Rate announcement this evening 👂. During the day, the market was also following the publication of July data on the Consumer Confidence Index and June statistics on New Home Sales in the US, which both turned out to be poor. The value of the index declined from 98.7 points to 95.7 points and from 696,000 to 590,000, respectively.

The US Stock Market - SNP500

US500 - 27.07.2022.jpg SNP500 4-Hr Chart on Wednesday, July 27th.

The SNP500 did not take lightly the news that the US Consumer Confidence significantly declined as this may indicate that consumers willingness to spend may be reserved. As a result, this can affect company earnings. 💰

The increase in interest rates is expected; therefore, it should not be too much of a surprise for traders unless the Fed surprises the market with a higher increase. A stronger rate hike may shock markets and further lower demand in the stock market.

🤓 Coca-Cola’s revenues grew 16% to $10.5 billion, and organic revenues (non-GAAP) grew 18% smashing its sales predictions. The price of the stock has increased by 1.62%. Another company that beat its sales expectation over the past quarter was McDonalds. Apparently, their app and delivery services significantly supported their sales. The price of Mcdonald’s stock grew by 2.63%.🎯

The price of the SNP500 has slightly declined during yesterday’s trading hours. The decline measures 0.56% but the price of the SNP500 is increasing in value this morning on the futures market. Though, traders will be looking to see how the market reacts once the bells ring for trading 📈.

Cryptocurrencies - Bitcoin

BTCUSD - 27.07.2022.jpg BTC 1-hour chart on Wednesday, July 27th.

Bitcoin had declined by 5.44% during yesterday’s trading and by 6.80% so far, this week. This morning however, the price is slightly higher and is forming a retracement. This should not confuse traders with a trend. Currently, the price still remains lower than the previous swing high and the impulse waves are currently pointing downward.

👨‍🏫The increase in interest rates this week seems to be strongly affecting the cryptocurrency market as it has done since the Fed started raising rates months ago. The price of Bitcoin had performed well during the previous week as the stock market increased and risk sentiment improved. However, the price this week has corrected by 60% compared to the previous bullish wave. Traders are looking to see if the price will cross the $20,640 mark and continue the downward trend.📉

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