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Futures Trade Soft After Scoring Strong Gains

Futures Trade Soft After Scoring Strong Gains

Stock futures are trading a bit slower as major stock indices are taking a breather after scoring stellar gains for the month of October. The gains that we have seen for the US indices were not solely exclusive to the US stock indices, but the European stock indices also soared remarkably. For instance, the DAX 30 index closed the month with a gain of over 9%.

As for today, the main and the biggest event of the month has started, and that is the Fed meeting. The Fed members are split in terms of policy, but it is widely anticipated that the Fed will increase the rate by 75 basis points when they announce their monetary policy decision tomorrow.

UK

The new Prime Minister has started to give clues on how and who will be paying more taxes to fill in the government coffers. The main thing that needs to be addressed is the cost of living crisis impacting everyone in the UK, and whether increasing taxes at this current time is the right strategy or not. The government is thinking intensely about filling in this void, and thus there is less focus on how that will influence the UK’s economy. Without a doubt, the British public will be left with even fewer pounds in their pocket after the fiscal plan is announced. And the question really is how and where growth will come from for the UK. Austerity may repair government coffers, but it certainly does not bring any growth.

Bitcoin

The crypto king continues to move in a sideways direction, and traders are hesitating to place any large bets ahead of the Fed decision, which is bound to bring mammoth moves for the dollar index. One important thing that requires attention is that the correlation between the US equity markets and Bitcoin has weakened a lot, and the reason for that is that the US indices reported some strong gains for the last month, but we didn’t hear a similar headline for Bitcoin. The best that we heard for Bitcoin is that it has only consolidated, and this has reduced some threats for a further downside move for the crypto king.

Going forward, for the next two days, what matters the most is the Fed meeting, and their monetary policy stance that is highly likely to influence the price of digital gold.

Gold

The shining metal has scored some gains, but overall price action remains muted as it is the strength or the weakness of the US dollar index, which is mainly in focus. Trades have largely priced in another interest rate hike of 75 basis points. Now, if we hear from the Fed that they want to cut the pace of interest rate hikes beyond this meeting, we may actually see gold prices moving higher.