Dollar index rises, while oil and gold fall ahead of Federal Reserve meeting

by JustForex

The US stock indices finished trading on Monday without a single trend. The Dow Jones (US30) was flat at the close, the S&P 500 (US500) decreased by 0.74%, and the NASDAQ Technology Index (US100) lost 2.04%.

Tomorrow will be the long-awaited March Federal Reserve meeting, at which the US Federal Reserve will raise interest rates. Most likely, the rate will be raised by 0.25%, but there is a slight possibility that due to the uncertainty caused by the war in Ukraine, the rate could be increased immediately by 0.5%. The Fed will also provide new macroeconomic forecasts along with the rate decision. Goldman Sachs Group lowered its forecast for the S&P 500 Index to 4,700 points from 4,900 points at the end of 2022 due to the conflict over Ukraine.

Unlike US indices, major European indices closed on the green territory on Monday. The German DAX (DE30) gained 1.38% on Friday, the French CAC 40 (FR40) added 1.75%, the Spanish IBEX 35 (ES35) increased by 1.13%, the British FTSE 100 (UK100) jumped by 0.53%. Investors hope that the Russian and Ukrainian delegations will come to a compromise and a ceasefire agreement. The UK labor market data showed positive dynamics. The unemployment rate declined from 4.1% to 3.9%, jobless claims fell by 48 thousand, and average earnings increased. The British economic outlook is now much better than that of the Eurozone. Today, the European Institute ZEW will publish economic forecasts for Germany and the Eurozone. Analysts expect to see a decline in numbers.

The European Union has introduced a new package of sanctions against Russia. The sanctions include a ban on new investments in the energy sector, according to the European Commission website. Exceptions are made for peaceful atom and energy transportation. Several goods such as steel products, luxury goods, premium cars, and jewelry are banned. The EU has banned rating agencies from providing any credit rating services related to Russia. The European Aviation Safety Agency (EASA) has suspended the certificates of Russian airlines.

Oil prices fell to a 2-week low amid a new round of negotiations between Ukraine and Russia, and as investors began to close their positions as oil hit analysts’ targets of $125. The United States warned China not to provide military or financial assistance to Russia. But India may accept Russia’s offer to buy crude oil and other commodities at a discount, which means India wants to keep its key trading partner.

Gold prices began to decline due to rising government bond yields ahead of the Federal Reserve’s interest rate decision. There are no fundamental growth factors for gold and silver now. The closer Russia and Ukraine are to a compromise, the faster gold will fall. The same applies to wheat and nickel prices.

Asia-Pacific stock indices traded without a single dynamic yesterday. Soaring inflation and uncertainty in the financial markets, aggravated by the beginning of Russia’s invasion of Ukraine, continue to worry many investors. Japan’s Nikkei 225 (JP225) gained 0.58% yesterday, Hong Kong’s Hang Seng (HK50) lost 4.97%, and Australia’s S&P/ASX 200 (AU200) increased by 1.21%. In Australia, the monetary policy minutes were published. The Australian Central Bank Board will not raise the monetary rate until actual inflation is steadily within the target range of 2% to 3%. The People’s Bank of China left its one-year medium-term credit line unchanged at 2.85%.

Main market quotes:

S&P 500 (F) (US500) 4,173.11 -31.20 (-0.74%)

Dow Jones (US30) 32,945.24 +1.05 (+0.0032%)

DAX (DE40) 13,929.11 +301.00 (+2.21%)

FTSE 100 (UK100) 7,193.47 +37.83 (+0.53%)

USD Index 99.09 -0.03 (-0.03%)

• – Australia RBA Meeting Minutes (m/m) at 02:30 (GMT+2);
• – China Retail Sales (m/m) at 04:00 (GMT+2);
• – China Industrial Production (m/m) at 04:00 (GMT+2);
• – China Unemployment Rate (m/m) at 04:00 (GMT+2);
• – UK Average Earnings Index (m/m) at 09:00 (GMT+2);
• – UK Claimant Count Change (m/m) at 09:00 (GMT+2);
• – UK Unemployment Rate (m/m) at 09:00 (GMT+2);
• – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – Eurozone Industrial Production (m/m) at 12:00 (GMT+2);
• – US Producer Price Index (m/m) at 14:30 (GMT+2);
• – US NY Empire State Manufacturing Index (m/m) at 14:30 (GMT+2).

by JustForex

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.