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First Light News: 22 November 2023

First Light News: 22 November 2023, FP Markets

The FP Markets Research Team produces First Light News during the early hours of the European session, a daily Market Briefing that helps ensure traders and investors are up to date in the macro space for the day ahead.

Good morning.

FOMC Minutes

The FOMC minutes served as the day’s highlight yesterday, though they offered little and were largely overlooked across the financial space. The minutes revealed that Fed officials see upside inflation risks and downside risks to growth; all FOMC participants agreed to ‘proceed carefully’ and see rates remaining in restrictive territory for ‘some time’. Another notable point from the release was that Officials ‘expected data in the coming months would help clarify the extent to which disinflation continues’.

This tells us that no rate increases are necessary at this time at risk of overtightening, but the door remains open for further policy firming should inflationary pressures increase.

While the Fed sees rates remaining higher for longer, it is clear that markets do not agree with this. Market pricing remained pretty much unchanged following the release of the minutes: around 100bps of cuts are still anticipated in 2024, with December’s meeting all but sealed and delivered for a hold.

First Light News: 22 November 2023, FP Markets(Bloomberg)

According to the Dollar Index, the dollar has reclaimed its position north of its 200-day simple moving average (SMA) at 103.62. While this is considered an early bullish trend signal, traders will be wary given that we just recently stepped below the dynamic value.

Major US equity indices were moderately lower yesterday, with the small-cap Russell 2000 largely the laggard (-1.2%), followed by the Nasdaq 100 (-0.6%). European stocks also closed slightly lower. The DAX 40 dipped 0.01%, the CAC 40 slipped 0.2%, and the FTSE 100 was down 0.2%.

Day Ahead

The Reserve Bank of Australia (RBA) Governor Michelle Bullock is scheduled to speak at the Australia Business Economists Annual Dinner in Sydney at around 8:30 am GMT. You will recall that the RBA Governor (at the ASIC Annual Forum in Melbourne) recently communicated that inflation is a ‘crucial challenge over the next one to two years’. The RBA Governor added: ‘There is a bit of a perception that the Inflation at the moment really is all a supply driven thing. Petrol prices, rents, these sorts of things, energy, but there’s an underlying demand component to it as well. And that’s what central banks are trying to get on top of’.

Another key watch today will be the UK Autumn Statement, expected around midday UK time. UK Chancellor Jeremy Hunt is reportedly prioritising tax cuts and increasing the national living wage. A recent tweet from Prime Minister Rishi Sunak highlighted that the government are taking five long-term decisions, one of which is ‘cutting tax and rewarding work’. Therefore, this could elevate volatility across sterling today, as well as domestic equity markets.

First Light News: 22 November 2023, FP Markets(Social Media Platform X)

Weekly US jobless filings will also be released today for the week ending 18 November at 1:30 pm GMT. Expectations heading into the event are for a slight fall in claims to 226,000, down from 231,000 the week prior.

G10 FX space as of 06:40 am GMT:

First Light News: 22 November 2023, FP Markets(Trading View)

Thanks for reading. Have a great day.

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  • First Light News: 22 November 2023, FP Markets
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