Early Morning Call: USD slips after Fed minutes
The FOMC released the minutes of the last meeting, held on 1 and 2 November, at which it raised the Federal Funds rate by another 75 basis points to between 3.75 and 4%.
Equity market overview
APAC equity markets followed the lead of US indices and closed the session higher.
In South Korea, the Bank of Korea (BoK) raised its rate by 25 basis points (bp) to 3.25%. It also revised its 2023 CPI forecast down to 3.6% from 3.7%, and its 2023 gross domestic product (GDP) growth down to 1.7% versus 2.1% previously.
Macro overview
Yesterday, evening the Federal Open Market Committee (FOMC) released the minutes of the last meeting, held on the 1st and 2nd of November, at which it raised the Federal Funds rate by another 75 basis points to between 3.75 and 4%.
It told the markets that "a substantial majority of participants judged that a slowing in the pace of increases would soon be appropriate". The minutes noted that the smaller hikes would give policymakers a chance to evaluate the impact of the succession of rate hikes.
Last month the Bank of England (BoE) bought £19 billion worth of long-dated and index-linked gilts to stabilise financial markets. Yesterday, the BoE set operational details of its plans to start selling some of these gilts. As previously announced, sales will begin on Tuesday 29 November, and will happen on Tuesdays, Wednesdays and Fridays, giving minimum prices that it will accept before each sale.
At 9am this morning, Germany's business climate for the month of November will be released. Economists anticipate a small rise to 85, from 84.3 in October, the first increase in six months.
Earnings
Elsewhere on the equity markets, Dr. Martens lowered its core earnings margin forecast after posting 5% profit before tax for the first six months of the year.
Kingfisher's third quarter (Q3) like-for-like total sales rose by 0.2%, dragged down by the underperformance of its UK businesses, B&Q and Screwfix.
Commodities
Oil prices are down this morning, after falling more than 3% yesterday.
Yesterday's move was triggered by G7 nations debating a Russian oil price cap. A cap above the current market level, in the range of $65-$70 per barrel. Urals crude delivered to northwest Europe is trading around $62-$63 per barrel. The cap would still make it profitable for Russia to sell its oil and in this way prevent a supply shortage on the global market.
Another factor kept prices lower yesterday: gasoline stocks. EIA inventories yesterday showed a drop in crude oil stocks of 3.7 million barrels, broadly in line with API data from the previous day.
Gasoline inventories surprised traders, with 3.1 million barrel increase. Distillate stocks increased by 1.7 million barrels.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Seize your opportunity
Deal on the world’s stock indices today.
- Trade on rising or falling markets
- Get one-point spreads on the FTSE 100
- Unrivalled 24-hour pricing
See opportunity on an index?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Try a risk-free trade
- See whether your hunch pays off
See opportunity on an index?
Don’t miss your chance – upgrade to a live account to take advantage.
- Get spreads from one point on the FTSE 100
- Trade more 24-hour indices than any other provider
- Analyse and deal seamlessly on smart, fast charts
See opportunity on an index?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
