US Stocks Gyrate Again Ahead of FOMC

After yesterday’s plunge and recovery, global stocks are consolidating ahead of the US FOMC release due later.

• US stock markets fell again yesterday before rebounding later on, with the S&P 500 & NASDAQ 100 indices recovering losses but still ending the day below their respective 200-day moving averages. During the Asian session, stocks have traded sideways. The market is awaiting tonight’s US Federal Reserve policy release and interest rate decision which should give more clues over the timing of rate hikes this year, which can have a major effect on stocks and other risky assets.
• Major cryptocurrencies have continued to slowly recover from sharp falls a few days ago. Bitcoin has recovered to trade above its key resistance level at $36,656 which is a bullish sign. However, Ethereum, the second largest cryptocurrency, remains stuck below its key resistance level at $2,544. This suggests Bitcoin is likely to be a better long trade than Ethereum in the near future.

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• In the Forex market, the Canadian dollar is the strongest major currency, while the Japanese yen and the US dollar are the weakest. This is not likely to last beyond the FOMC release due later today.
• In today’s US FOMC policy release, it is expected that the Fed will communicate it intends to hike rates in March. If it does not, we will likely see US stocks rise and the US dollar weaken.
• In addition to the US FOMC release, we will first get the monthly policy release and rate decision from the Bank of Canada, which could produce volatility in the Canadian dollar. There will also be a release of New Zealand CPI (inflation) data.
• Daily new coronavirus cases soared to a new global record at the end of last week, with more than 3.7 million new cases recorded for the first time.
• Data suggests that the globally rampant omicron coronavirus variant, while considerably more infectious, has notably milder effects than previous coronavirus strains, with an estimated 70% reduction in the probability of hospitalization. This is potentially very good news for both health and economy. Pfizer have announced they plan to have an omicron-specific vaccine ready in March.
• It is estimated that 60.6% of the world’s population has received at least one dose of a coronavirus vaccination.
• Total confirmed new coronavirus cases worldwide stand at over 359.3 million with an average case fatality rate of 1.57%.
• The rate of new coronavirus infections appears to now be increasing most quickly in Algeria, Armenia, Austria, Bangladesh, Barbados, Belarus, Belgium, Belize, Bhutan, Bosnia, Brazil, Bulgaria, Chile, Croatia, Cuba, Czech Republic, Denmark, Egypt, Estonia, France, Germany, Guatemala, Hungary, Iraq, Israel, Japan, Jordan, Kazakhstan, South Korea, Kosovo, Kuwait, Kyrgyzstan, Latvia, Luxembourg, Moldova, Mongolia, Morocco, Nepal, Netherlands, North Macedonia, Norway, Oman, Pakistan, Panama, Paraguay, Poland, Portugal, Romania, Russia, Serbia, Singapore, Slovakia, Slovenia, Sweden, Switzerland, Tunisia, the UAE, Ukraine, Uruguay, and Venezuela.