Hello reader, hope you’re doing well. Markets are expected to remain range-bound with a mixed leaning on Wednesday, matching the sluggish overnight US market trend as investors await the outcome of the US Fed’s FOMC meeting, which will be held late tonight. The market will be watching to see if the Fed chairman is confident that inflation will be contained and that no more tightening is required. Powell will emphasise that data reliance (particularly the July and August CPI statistics and the jobs report) will continue to be a major theme for future rate prospects. Technically, the Nifty’s rally is met with resistance around 19887, while the downside is firmly supported at 19500 zone.
This week, the European Central Bank (ECB) and the Bank of Japan (BOJ) will hold policy meetings with the Fed. The ECB is expected to hike its base rate by another quarter point before pausing to absorb signals that eurozone manufacturing is weakening. The BOJ is likely to raise its inflation prediction, but this may not be enough to cause a policy change at this meeting.
US stocks closed higher on Tuesday as earnings reports came in and attention moved to the Fed’s rate-setting meeting on Wednesday. The mystery isn’t so much what might happen tonight as it is what the Fed would signal for its September meeting. According to the CME FedWatch Tool, futures trade suggests that the Fed will raise interest rates by another quarter point, while markets believe that the Fed will hold rates unchanged in September.
As always, risk management is key, and a proper system in place prevents one from losing out too much, in case of outlier events. Have a good trading day, and may the force be with you!
Disclaimer: this post is for educational purposes only, we are not SEBI registered analysts. Trades mentioned here are not trade recommendations. Equity Investments are subject to 100% market risk, please consult your financial advisor before investing.
It is a great post! Detailed.