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December 13, 2022

Big Fed Decision Ahead

Michael J. Donoghue
Big Fed Decision Ahead

Fresh on the heels of today’s surprisingly low inflation data for the United States, all eyes will be on the big Fed decision ahead. Tomorrow afternoon at 2 pm ET, the Federal Open Market Committee (FOMC; the policy-making body within the Federal Reserve) will reveal their latest increase in the Federal Funds Rate, along with a corresponding statement and a new set of economic projections for the next two years (including interest rate forecasts). Following this, at 2:30 pm ET Fed Chair Jerome Powell will speak at the FOMC press conference, where he will answer questions regarding monetary policy strategy, economic outlook, and more. All these events are likely to cause a great deal of volatility across financial markets, especially as equities investors eagerly await a slower rate hike pace.

With a 50 basis point rate hike forecast for tomorrow, instead of another brutal 75 basis point hike like those that have been implemented consecutively the past several times, traders and analysts will be on the lookout for more signals regarding a further pivot away from hawkishness. They may feel further emboldened in this search in light of the latest CPI data released this morning, showcasing another month of slowing inflation, bolstering stock market optimism and reducing US Dollar bullishness. However, whether evidence for this narrative continues to build has yet to be seen: there is still the chance that the FOMC could further upwardly revise interest rate forecasts while slowing the pace, which would not be quite as bullish for stocks and bearish for USD as it may seem.

Three Indices to Watch

In yesterday’s article we discussed three pairs to monitor for those who are bullish on USD; they remain worth checking on for potential trade setups this week. Today, however, let’s examine three stock market indices worth watching for those who may be anticipating a fundamental catalyst related to potential Fed dovishness tomorrow. Though two receive neutral signals, the EdgeFinder currently offers positive ratings for all three listed below, as can be seen among their respective ratings, signals/biases, and corresponding charts.

1) US30 (Dow Jones) - Earns a ‘3’ Rating, or a ‘Buy’ Signal

Big Fed Decision Ahead
Big Fed Decision Ahead

2) SPX500 (S&P 500) - Earns a ‘2’ Rating, or a ‘Neutral’ Signal

Big Fed Decision Ahead
Big Fed Decision Ahead

3) NAS100 (Nasdaq-100) - Earns a ‘2’ Rating, or a ‘Neutral’ Signal

Big Fed Decision Ahead
Big Fed Decision Ahead

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DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here
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