Hawkish Fed Remains Dominant Force


The bearish influence of ongoing hawkish Federal Reserve officials’ comments remains the dominant influence. Traders continue to believe interest rates will remain elevated for a longer period.

Financial futures markets are predicting there is an 80% probability that the Federal Open Market Committee will keep its fed funds rate unchanged and a 20% probability of a 25 basis point increase at its November 1 policy meeting.


The U.S. dollar index is higher and is near its highest level since early March.

The U.S. Federal Reserve made it clear that interest rates in the U.S. will stay higher for longer.

In the longer term, interest rate differential expectations remain favorable for the greenback,  since the U.S. economy appears to be holding up relatively well compared to economies elsewhere.

The euro currency is lower after a report showed Germany’s business outlook improved slightly in September but was weaker than economists’ estimates.

The Confederation of British Industry’s monthly balance of retail sales index increased by 30 points from the previous month to -14 in September 2023, compared to August’s over two-year low of -44.


U.S. stock index futures are lower following weaker European equity markets.

In addition, there is the bearish influence of a potential shutdown of the U.S. government.

The August Chicago Federal Reserve national activity index was -0.16 when 0.15 was expected. The index was 0.12 in July.

The 9:30 central time September Dallas Federal Reserve manufacturing index is anticipated to be -12.

Stock index futures are oversold at these levels.


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