Emerging market currencies fell on Wednesday, weighed down by a stronger US dollar, as traders analyzed mixed signals from Federal Reserve officials on the future path of interest rates.
The MSCI index tracking emerging market currencies fell 0.2%, with the Hungarian forint, Czech koruna, Brazilian real and Polish zloty all dropping by at least 0.8%. The Bloomberg dollar index rose 0.6%, while US Treasury yields rose after San Francisco Federal Reserve President Mary Daly said on Wednesday that further rate cuts might be needed but the Fed should proceed with caution.
Marco Oviedo, a senior strategist at XP Investimentos, said that given the officials’ remarks, the market has revised its expectations for the Federal Reserve. “There will be differences among the committee members, so the market is uncertain about how the future will develop, and the data remains uncertain.”
For Oviedo, it was a “typical” risk-off day, though he noted that the lack of economic data from the world’s largest economy seemed to limit the risk aversion. “For now, the risk aversion seems more driven by market sentiment,” he added.
Markets have been seeking further clarification on the Federal Reserve’s path since Fed Chair Jerome Powell’s speech on Tuesday. In his remarks, Powell reiterated his view that the road ahead for policymakers in weighing further rate cuts could be challenging.
The market also listened to remarks from other Federal Reserve officials. Federal Reserve Governor Michelle Bowman made dovish remarks, saying that policymakers face the risk of falling behind and need to take decisive action to lower interest rates as the labor market weakens. In contrast, both Atlanta Fed President Raphael Bostic and Chicago Fed President Austan Goolsbee issued warnings about inflation.
Treasury Secretary Scott Bessent expressed disappointment on Wednesday in an interview with Fox Business News that Powell had not clearly set out an agenda for interest rate cuts.
Benito Berber, chief economist for the Americas at Natixis, said: “The current price action in emerging market foreign exchange markets seems to incorporate all the characteristics of a risk-off event.”
Technical analysis:
The WeChat functions may be restricted from time to time. If you want to experience the plugin, please leave your contact information when adding a friend so that we can add you back easily!!!
Gold: The overnight price failed to break through 3780, so the blue momentum break and pullback buy operation cannot be entered. On the other hand, after the price swept down to 3735, it rebounded to 3743 buy stop, which could achieve a profit-to-loss ratio close to 1:1. The price is consolidating near 3735/40 during the day. The day’s multi-level waterline lies in the 3745/50 area. If it recovers above this level, one should continue to attempt buy operations. For detailed positions, please consult the plugin.
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the picture, please contact V: Hana-fgfg and leave your contact information for us to get back to you.
Nasdaq: Yesterday, our plugin clearly reminded that a break above the blue line would require a buy stop operation; in addition, after a pullback to the yellow line, a buy stop operation should be carried out when the price rebounds back to 24,513. Currently, both of these two operations have achieved good results. For today’s trading, we suggest that if the price rebounds further, the long positions bought at the overnight yellow line should be further protected. The ideal entry point in the future is still to look for an opportunity to buy stop after the market sweeps through the 24,300 – 24,400 range. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the chart, please contact V: Hana-fgfg and leave your contact information in the message for us to get back to you.
Crude oil: Yesterday, the price broke through the blue zone and also rose above 64.13, but there was no pullback. Therefore, the orders placed in the blue zone did not get executed. Today, we will continue to observe whether the price can stabilize and rebound again when it pulls back to around 64.50. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the picture, please contact V: Hana-fgfg and leave your contact information in the message for us to get back to you.
Today’s key economic data and events to focus on:
18:00 UK CBI Retail Sales Expectations Index for September
20:30 US August Durable Goods Orders (initial)
20:30 U.S. Personal Consumption Expenditures Price Index for the Second Quarter (Final Reading)
22:00 US August NAR seasonally adjusted existing home sales
