The season of quarterly results of companies in the United States continues. Although the results do not seem to be disappointing, investors are waiting for today's Fed decision and the press conference of the Federal Reserve Chairman, fearing that the possibility of reducing the asset purchase program will be announced soon.
This morning, the day of the decision announcement after the Federal Reserve's two-day meeting and ahead of the release of this week's economic data, U.S. index futures do not appear to be fluctuating much and may be near record highs.
It's not time to change interest rates yet
The market consensus is that the U.S. central bank may reaffirm its commitment to keep interest rates near zero for the foreseeable future to support the economy. However, it is likely that the market may want to hear when the Federal Reserve is going to start tapering its asset purchase program. First, the Fed may announce a reduction in QE, then actually start reducing it and only finally raise interest rates. Currently, the Fed is conducting QE to the tune of $120 billion per month, and this pace could be reduced when the Federal Reserve believes that the U.S. economy is already on a stable recovery path.
Investors may also pay attention to GDP and core personal consumption expenditures data for March. These will be released on Thursday and Friday, respectively.
Giants unveil results
Among individual stocks, Alphabet, owner of Google, rose more than 4 percent after announcing better-than-expected earnings, while Microsoft fell nearly 3 percent, even after announcing its biggest revenue increase since 2018.
The market is waiting for more releases. On Wednesday after the session, the world's largest listed company, Apple, will report results. Giants such as Boeing and Facebook will also report.
Time for the dollar to recover?
On the currency market we could observe the strengthening of the US dollar, which seems to be gaining after a significant depreciation in early April. The US Dollar Index fell from 93.5 to 90.6 points at that time and was at its lowest level since the end of February 2021. Thus, it seems that it may be difficult for the market to sustain such a pace of USD decline and the coming days or weeks may bring a rebound. This in turn may also be well seen in the pairs: EUR/USD (here the rate turned back from around 1.21), USD/CHF or USD/JPY, where corrections after strong USD declines also seem to appear.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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