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Market Insights

The US FED preview September 2022

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Positive underlying conditions for USD

Real US rates rising fast, so, is now the time to be chasing the US Dollar?

Upcoming Event: Wednesday September 21, 2022

US Federal Open Market Committee (FOMC) Interest Rate Decision

The reality check:

  • Central banks are now “front-loading” e.g. hiking rates in front of upcoming inflation data on expectations that inflation will remain persistently higher for longer.
  • Many factors are supporting the USD e.g. higher interest rates adding downside pressure on risk assets such as stocks and the related stock indices; the selling-off of these assets driving cash from sales into the safety of the USD.
  • The major bear market in the bond market adds to further support demand for holding cash in USDs.
  • All US consumer price index items rose 0.1% during August as food and shelter increased, but gas prices did fall.

August Consumer Price Index (CPI) moved further ahead and so did the strength of the US dollar!

How did the USD perform against a basket of developed and emerging market FX pairs over the previous 30 days?

Symbol Product name 1 Month %Change
USDZAR U.S. Dollar/South African Rand 8.07%
USDJPY U.S. Dollar/Japanese Yen 6.78%
USDNZD U.S. Dollar/New Zealand Dollar 6.64%
USDNOK U.S. Dollar/Norwegian Krone 6.37%
USDGBP U.S. Dollar/British Pound 6.28%
USDAUD U.S. Dollar/Australian Dollar 5.23%
USDSEK U.S. Dollar/Swedish Krona 4.63%
USDCAD U.S. Dollar/Canadian Dollar 3.57%
$DXY U.S. Dollar Index 3.32%
USDCNY U.S. Dollar/Chinese Yuan 3.29%
USDPLN U.S. Dollar/Polish Zloty 3.09%
USDSGD U.S. Dollar/Singapore Dollar 2.26%
USDEUR U.S. Dollar/Euro 2.08%
USDCZK U.S. Dollar/Czech Koruna 1.99%
USDCHF U.S. Dollar/Swiss Franc 1.42%
USDMXN U.S. Dollar/Mexican Peso 1.06%
USDHKD U.S. Dollar/Hong Kong Dollar 0.10%
USDRUB U.S. Dollar/Russian Ruble -1.29%

The FED’s next move

  • Most likely the FED will make another big rate hike
  • The FED may also adjust their projected interest rate path higher for the rest of 2022 and for 2023
  • 4% interest rate by the end of 2022?


What to expect on Wednesday the 21st of September, 2022

Time: GMT+0 Country Event Current rate Forecast
6:00 PM United States Fed Interest Rate Decision 2.5% 3.25%

US inflation and interest rate chart since the 1970’s

What would the USD look like if US rates increase above 10%? Are markets bracing for a repeat of the 1970's-early 80s?

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Endless possibilities for traders during this economic cycle!

How will these Skilling products move on FED day?

EUR / USD Gold S&P 500 US 100 Dow Jones 30 Bitcoin Apple Citigroup

USD pairs, precious metals, stock indices and large cap US stocks expected to react to the FED’s upcoming interstate rate policy announcements.

  • Since Citigroup is a large US bank how will Citi stock price react to higher US interest rates? Will large banking stocks outperform or will the banking sector come under pressure from the effects of a slowing economy?
  • Apple Inc. is on the front lines of the retail technology sector so will higher US interest rates hold back consumer spending on big ticket technology products or will the consumer keep on buying the latest technology regardless of how high interest rates may rise?

Key price levels to watch on potential asset movers during the FED meeting:

EUR / USD

EUR / USD to continue its multi-month downtrend if the US hikes more than the 0.75% market expectation or has the EUR / USD reached the bottom?

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Gold

Gold price to remain under downside pressure if the USD continues to strengthen after Wednesday's US FED interest rate announcement?

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US Indices

Just how much further can the US major stock indices fall before buyers can spot a good value point to enter new long positions?

SP500 , US 100 and Dow 30 to remain on edge before Wednesday's US FED policy announcement!

S&P 500

S&P 500 waiting on earnings season for signs that corporate profits either can save the day or drag the index lower!

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US100

US100 index on edge as the interest rate sensitive technology heavy sector index braces for higher USD interest rates!

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Dow Jones 30

Can the blue chip DJ 30 index outperform the S&P500 and US 100 indices in the face of higher interest rates and higher inflation outlooks?

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Bitcoin

Can the US FED interest rate announcement help Bitcoin find a bottom?

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Not investment advice. Past performance is not indicative of future results. Trading cryptocurrency may not be available depending on your country of residence.

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