The dollar is waiting patiently for next data
The U.S. dollar was practically flat versus the euro and yen on Tuesday following big gains the day before. Investors are seeking to prepare for next week’s expected interest rate rise from the US Federal Reserve.
The Australian dollar fell 0.1% to $0.6690 prior to the RBA’s statement that it was not on a predetermined path to tighten policy. Activity in the US services sector surprisingly increased in November, according to data released on Monday. This sparked speculation that the Federal Reserve may raise interest rates more than previously anticipated.
Traders presently predict a half-point boost from the Fed next week and they forecast a terminal rate of slightly around 5% in May. Next week’s schedule also includes the release of key November consumer price index data.
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The dollar index, which compares the dollar to six major counterparts, has risen approximately 10% so far this year. The previous gain was 0.1% on Tuesday. At $1.0492, the euro remained unchanged versus the dollar, while the dollar fell 0.1% against the Japanese yen. The dollar gained 0.6% versus the Canadian dollar before to Wednesday’s rate announcement by the Bank of Canada.
Tech stocks are on the downfall
The Dow finished lower on Tuesday. Investors’ appetite for optimistic wagers remained subdued due to persistent fears that a higher-for-longer-period interest rate environment might push the economy into recession.
The Dow Jones Industrial Average dropped 350 points, or 1%, while the Nasdaq Composite lost 2% and the S&P 500 dropped 1%. Large technology companies remained in the crosshairs, led by a more than 6% decrease in Meta Platforms as regulatory attention grew.
Alphabet , Apple and Microsoft all declined by more than 2%. At its meeting next week, the Fed is widely expected to decrease the pace of rate rises to 0.5%. However, its estimates regarding the trajectory of future rate rises are expected to dominate investor focus.
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The majority of the eleven main S&P 500 sectors declined. Energy, communications services, and technology were among the top decliners. Utilities, a defensive sector that is frequently favored in times of economic uncertainty, performed better.
Oil hit rock bottom
During frantic trading on Tuesday, US oil prices reached their lowest settlement levels of the year, with Brent ending below $80 a barrel for the second time in 2022, as investors left turbulent markets amid an uncertain economy.
Brent crude futures fell $3.33, or 4%, to settle at $79.35 a barrel. WTI crude futures declined $2.68, or 3.5%, to close at $74.25 a barrel, their lowest settlement of the year.
Three consecutive sessions have seen price declines of greater than 1%, wiping off the majority of the year’s gains. Despite the continuing war in Ukraine and one of the greatest energy crises in recent history, a run of pessimistic headlines has frightened investors.
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