Skip to main content
Home
  • English
  • العربية
  • SUPPORT
  • Log in
  • JOIN EXINITY
  • Markets
    • Markets

    Explore global financial markets

    Individual stocks
    • Stocks
    • Stock CFDs
    Forex and commodities
    • Forex pairs
    • Commodities
    Indices
    • Indices
    • Currency indices
  • Ways to trade
    • Ways to trade

    Explore our services at a glance

    • Exinity World

    Get pure investing simplicity and build a global portfolio from just $20

    • Exinity Trader

    Been trading for a while?
    Say hello to Trader

    • Exinity Trader Pro

    Pro, meet pro.
    The service for experienced traders

  • Edge
    Edge

    The markets are full of opportunity, but you won’t find it by accident. Edge puts useful and jargon-free insight at your fingertips.

    Edge library
    • Understanding the markets
    • Analysis and forecasting
    • Understanding risk and returns
    • Learning from experience
    Trading ideas
    • What our experts say
    • Meet our experts
  • About

What our experts say

Markets set to march to Fed’s tapering cues

Han Tan
Chief Market Analyst
28.07 @ 10:51 GMT
Han Tan

US stock futures are little changed in the wake of Tuesday’s drop, as markets await the Fed’s latest commentary on its tapering intentions at its two-day meeting which concludes tonight. The dollar index (DXY) is holding above the 92.40 mark, having found its stay above the psychological 93 level unsustainable for the time being. Markets have dialed back their expectations for a US interest rate hike in December 2022. The moderating greenback is in turn allowing spot gold to reclaim the $1800 handle.

Although a more distinct shift towards tapering would be a likelier event at next month’s Jackson Hole Economic Symposium or at the September FOMC meeting, that won’t stop investors and traders from parsing through the Fed statement as they try and pre-empt policymakers’ next move.

Markets ready to react to Fed’s subtle shifts

The Fed’s choice of words later today, as contained in its policy statement or spoken during Fed Chair Jerome Powell’s press conference, will be closely scrutinised for clues about its tapering plans. Overall, markets are only expecting minor tweaks, with policy settings left untouched.

Still, surprise hints that economic conditions are indeed ripening for QE tapering could potentially extend the declines in equities while boosting the US dollar.

Fed’s dovish narrative to be judged against hard data

Market participants will also be checking the Fed’s stance against the US economic data due this week. Already, Tuesday’s release of July’s US consumer confidence levels marked a sixth consecutive month of improvement, with consumers on main street shrugging off the downside risks stemming from the delta variant. It remains to be seen what context the Fed will use when assessing such risks and if policymakers’ concerns have been heightened enough to alter their economic outlook and the tapering timeline.

The hard US economic prints due this week, such as Q2 GDP, jobless claims and core PCE inflation, are also set to be used as sounding boards to test Fed Chair Jerome Powell’s insistence that inflationary pressures are transitory. Should upbeat data underscore the resilience of the ongoing recovery in the world’s largest economy, that could force the FOMC to abandon any remnants of its dovish bias and hasten the tapering that’ll pave the way for a US interest rate hike.

Earnings may be subservient to Fed’s hints

Facebook and Amazon are up next on the tech titans’ earnings release conveyor belt. Already there has been mixed reaction to Microsoft and Alphabet’s results, judging by how their respective share prices fared after hours on Tuesday.

The bar has been set high for more immediate upside for tech stocks. After all, elevated expectations for a broad earnings beat in the tech sector had sent most FAANG stocks to fresh record highs earlier this month. Hence, the incoming Q2 financial results will need to greatly exceed market expectations, while upbeat guidance may be required to shore-up the immediate downside for tech stocks over the coming days.

US equities had been due for a pullback, with technical indicators having denoted overbought conditions. All eyes are now on the Fed’s potential signaling of its tapering intentions later today which is likely to hold sway over how risk assets perform over the summer.

Disclaimer: This material is comprised of personal opinions and ideas. It should not be construed as an investment recommendation or a solicitation for any transaction. It does not imply any obligation to purchase investment services, nor does it guarantee or predict future performance. Exinity, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.

Ready to jump into the markets?

Choose your Exinity experience and create your account in minutes

JOIN EXINITY
  •  
  •  
  •  
  •  
Home
  • About us
    • Exinity Group
    • Careers
    • Company news
    • Meet our experts
  • Useful links
    • Trading platforms
    • Trading tools
    • Trading hours
  • Support
    • FAQ
    • Contact us

The services on the Website are provided by Exinity Limited (exinity.com), regulated and licensed by the Financial Services Commission of the republic of Mauritius with an Investment Dealer License bearing license number C113012295.

Card transactions are processed via Exinity Services Limited (EU merchant company), a company incorporated in the Republic of Cyprus with company number ΗΕ 400404, registered office at 64 Agiou Georgiou Makri, Anna Maria Lena Court, Office 201, 6037, Larnaca, Cyprus and regulated by the laws of Cyprus. Address for cardholder correspondence: [email protected] Business location address: 35 Lamprou Konstantara, Kato Polemidia, 4156, Limassol, Cyprus.

Exinity ME Ltd is registered under the Laws of the Abu Dhabi Global Market (“ADGM”), with registered offices at 16-104, 16 Floor, Al Khatem Tower, ADGM Square, Al Maryah Island, Abu Dhabi, UAE. It is regulated by the Financial Services Regulatory Authority (“FSRA”), Financial Services Permission Number 200015 and is a duly licensed Category 3A Firm authorized to provide financial products and services to persons who meet the qualifying criteria of a Professional Client as defined by the FSRA rules.

Risk Warning: Trading Forex and Leveraged Financial Instruments involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Trading non-leveraged products such as stocks also involves risk as the value of a stock can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. It is the responsibility of the Client to ascertain whether he/she is permitted to use the services of the Exinity brand based on the legal requirements in his/her country of residence. Please read Exinity’s full Risk Disclosure.

Regional restrictions: The Exinity brand does not provide services to residents of the USA, Japan, New Zealand, Canada, Mauritius, Haiti, Hong Kong, Suriname, the Democratic Republic of Korea, Puerto Rico, the Occupied Area of Cyprus.

© 2021 Exinity

Terms and agreements   |   Privacy   |   Cookies