American equities declined sharply on Monday as investors started to refocus on the upcoming interest rate decision by the Federal Reserve. The Dow Jones shed more than 300 points while the S&P 500 and Nasdaq 100 index declined by 45 and 170 points respectively. At the same time, the yield of the 10-year government bond declined to 1.42%. Analysts expect that the Federal Reserve will tighten monetary conditions when it concludes its meeting tomorrow. This tightening will include increasing its tapering and signalling about interest rates.
The US dollar index rose slightly ahead of the upcoming US producer price index (PPI) data. Economists expect that the PPI number rose to a multi-decade high as the supply chain challenges continued. They expect that the headline PPI will rise to about 9.2% while the core PPI will rise to 7.2%. These numbers will come a few days after the US published strong consumer price index (CPI) data. Inflation rose to 6.8% in November, the highest level in decades. The PPI comes as the FOMC starts its meeting.
The British pound tilted lower as the market waits for the latest UK jobs numbers scheduled for this morning. Data compiled by Investing.com shows that analysts expect that the country’s unemployment rate declined to a pandemic-era low of 4.2%. Wages are also expected to have held steady in October. These numbers will come a day ahead of UK inflation numbers. The Bank of England will also start its meeting tomorrow.
EURGBP
The EURGBP pair rose to an intraday high of 0.8547. On the four-hour chart, the pair has formed a head and shoulders pattern. The current rebound is part of the right shoulder. It has also moved slightly below the 23.6% Fibonacci retracement level. It is also slightly above the 25-day and 50-day moving averages while the Stochastic oscillator has moved higher. Therefore, the pair will likely have a pullback later today.
EURUSD
The EURUSD moved sideways as investors refocused on the upcoming Fed and ECB interest rate decisions. The pair is trading at 1.1296, which is along with the 25-day moving average. The Average True Range (ATR) is declining, which is a sign that there is no volatility. The Relative Strength Index is also at the neutral level of 50. Therefore, the pair will likely remain in this range today.
NDX100
The Nasdaq 100 index declined to a low of $16,152, which was lower than last week’s high of $16,422. On the four-hour chart, the index is slightly below the dots of the Parabolic SAR indicator. The MACD has moved slightly below the neutral line while the RSI is pointing lower. Still, the index will likely turn higher in the coming days.
