NAS100 Supported Ahead of US CPI Inflation

  • NAS100
    (${instrument.percentChange}%)

NAS100 Analysis

The US Federal Reserve has maintained a very hawkish stance, despite the moderation in the pace of tightening last month. Officials upgraded their views on the appropriate policy path, expecting a median terminal rate of 5.1%, while the accounts of that meeting highlighted the fact that "no participants anticipated that it would be appropriate to begin reducing the federal funds rate target in 2023". [1]

Markets on the other hand, believe that the Fed will pivot in order to avoid a hard landing, with Friday's Jobs Report and the services sector contraction, reinforcing these hopes. CME's FedWatch Tool assigns the highest probability to rates peeking at a lower 5.0% and also points to rate cuts towards the end of the year. [2]

Moreover, it prices-in a small 0.25% increase at the next meeting and Chair Powell did not push against this expectation yesterday, opting not to comment on monetary policy. This helped Wall Street, since If policy makers intend to go with a bigger increase at the February 1 meeting, they will likely need to prepare markets for that.

Investors now turn to the December Consumer Price Index, which is due on Thursday and any Fed-speak after the announcement. Inflation has been easing, but it has not dropped enough for the central bank's liking,

NAS100 remains supported today, after a three-day advance, trying to take another crack at the critical 38.2% Fibonacci of the December high/low drop and pierce into the daily Ichimokou Cloud. Successful effort will put the upper border (11,580-11,633) in its crosshair, but will need a catalyst for taking it out.

Despite the upbeat mood, NAS100 rejected the 38.2% Fibonacci earlier in the week and as long as it does not break fresh ground, it is in a precarious position. This keeps risk for fresh lows active (12,675) that would expose it to 10,437, although sustained weakness below that level does not look easy at this stage.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 11 Jan 2023 https://www.federalreserve.gov/monetarypolicy/fomcpresconf20221214.htm

2

Retrieved 15 Jun 2024 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

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