This week, the Federal Reserve made headlines as they signalled an increase in interest rates, causing stocks to stumble and putting pressure on the gold market.
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Fed may hike more than expected, Fed members point to 6%
Global equities were again on the rise after a hiccup, but the US’ monetary policy is still a concern.
The stock market gained between 3-15% this year, mainly influenced by a weakening monetary policy, earnings, and a lower risk of recession. These three factors have resulted in higher investor sentiment and risk appetite.
However, is the tide about to change?
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Stocks close lower as the 2023 rebound loses steam
US stocks extended their recent losses as investors debated the outlook for interest rates and reviewed corporate earnings.
The three major indexes opened higher on Friday, Feb. 10. Still, they turned lower intraday, with the S&P 500 falling 0.9% to 4,081, the Dow Jones declining 0.7% to 33,699, and the Nasdaq losing 1% at 11,789.
The stock market had rallied to start the new year, with some investors hoping for lower interest rates as inflation moderates. However, the market has oscillated recently as expectations for monetary policy have changed following hot economic data and comments from Fed officials.
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Gold looks south amid Bear Flag, ahead of key United States data
Gold price is sitting at its lowest level in five weeks near the $1,850 psychological mark, on track for its second weekly drop due to the renewed uptick in the US Dollar and souring risk sentiment.
Investors are becoming cautious ahead of key economic data from the US which could also add to the downward pressure on the Gold price. Currently, the US Dollar Index is rising while the US S&P 500 futures are losing, with the Gold price testing lows despite sluggish US Treasury bond yields.
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EUR/USD eases toward 1.0700 amid renewed USD demand
According to the daily chart of EUR/USD, investors are still indecisive about the direction of the pair. The pair is trending downwards as the overall risk sentiment remains weak. The focus is currently on the economic projections for the EU and sentiment data in the US.
At the same time, technical indicators remain neutral but negative, and the pair remains below the 20 Simple Moving Average (SMA), which is gradually declining. This confirms the forecasts of analysts to decline, but the currency market is still in volatility.
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This concludes our weekly recap. Have a great weekend and see you next week! 👋
