Risk on dominated in the Asian session with safe havens USD and JPY trending lower
The Fed’s monetary policy decision is likely to determine the near term view.
A breakdown through Rising Wedge could point further losses for the S&P 500.
April’s uptrend directs the Nasdaq 100 higher.
Asian session
Risk on dominated in the Asian session with safe havens USD and JPY trending lower versus major peers
The Australian Dollar (trade-sensitive) traced commodity prices northwards, as gold pushed beyond $1940/oz and West Texas Intermediate pared losses.
The Australian ASX 200 and S&P 500 futures advanced following remarks from Pfizer CEO Albert Boula, that a covid vaccine could be available by year end boosting risk sentiment.
Euro -zone industrial production data (July) is in focus before attention will move towards Wednesday’s Federal Reserve monetary policy decision on September 16.
FOMC To Drive Outlook for S&P & NASDAQ
Wednesday could direct the outlook for US equity indices as the Fed gives an updated Summary of Economic Projections (SEP) . The central bank is also expected to give further details on its shift in policy framework to average inflation targeting (AIT).
Federal Reserve Chair Jerome Powell announced the Fed’s shift in strategy, that allows inflation to overshoot the 2% target to make up for periods when it runs under 2%, at the annual Jackson Hole economic symposium in late August.
The change of strategy will most likely be reflected in the Federal Reserve’s dot plot, which is expected to move significantly lower over the longer term, potentially boosting riskier assets and weighing on demand for the greenback The Fed’s dotplot for June showed the Fed Funds rate normalising at 2.5% after-2022.
Despite Congress’ failure to agree to additional fiscal stimulus and over 200,000 covid deaths, further Fed stimulus, outside of forward guidance, looks unlikely.
Even so, any additional explanation from the Fed over the new framework could calm investor anxieties and lift the S&P 500 and Nasdaq 100 potentially boosting them to recently reached yearly highs.