Market Snapshot – All Eyes on the Fed

Stocks Buoyant Ahead of FOMC

Stocks rebounded for the second day today as tech stocks picked up some momentum ahead of the FOMC later in the day. The DAX was higher today following the higher close in the US stock markets yesterday. The FTSE was slightly lagging but this was understandable considering the confusion and the delays in the formation of the government in the UK. On the other hand, the currency markets have been stable for most of the day as the markets would like to wait to hear from the Fed before choosing the short and medium term trend.

Markets Eye FOMC

All eyes will be on the FOMC tonight as the Fed is expected to hike rates this month and also present an outlook for the rate hikes in the future. Though the Fed has not explicitly given any indication of a rate hike today, it has not said the opposite as well and hence the markets assume that it is a given. So more than the headline rate hike, the markets are more focussed on the statement that accompanies the rate hike to see if the Fed has plans for further rate hikes especially considering the faltering economic data from the US over the last few weeks.

Gold in Tight Range

Gold prices have been in a generally tight range during the course of the last 24 hours and this is likely to continue in the lead up to the FOMC where the Fed is expected to hike rates. If the Fed is hawkish, then it can be safely expected that the gold prices would fall towards 1248 and thereon towards 1220 in the short term.