Waiting on FOMC Meeting
The highlight for global markets will come during early afternoon trading hours with the result of the latest FOMC meeting. While no changes to rates or policy are expected, the market will scrutinize the Fed’s latest economic forecasts (the “dot plot”) as well as post-meeting comments from Fed Chair Powell for clues on upcoming policy moves.
While the S&P did not forge our favorite bottoming signal on the charts yesterday, uncertainty from the Evergrande situation has temporarily passed, bargain-hunting buying has surfaced, and two foreign central banks have left interest rates unchanged overnight and have not threatened tapering.
The Dow futures also took out yesterday’s low in the overnight action leaving the charts vulnerable to further selling. The NASDAQ is significantly oversold from the washout last Friday and Monday and the market has shown the ability to respect support at 15,000.
Like the US treasury markets, the dollar has settled into a range as it waits for the FOMC outcome.
While the euro has managed to reject Monday’s spike low and consolidated on the charts, the currency is now facing a fundamental junction in the form of the US Federal Reserve meeting.
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