Fed Chair’s Reluctance on Rate Hike Weakens USD, Fuels Equities Rally

The market dynamics on Wednesday were notably shaped by weaker economic data, a decrease in Treasury borrowing that was less than anticipated, and Federal Reserve Chair Powell’s cautious stance regarding a potential interest rate hike in December. These elements contributed to a softer US dollar, an 11 basis point reduction in 10-year Treasury yields, and a rally in equities, with the Nasdaq showing a significant increase of 1.65%.

In the currency market, the Australian dollar led the way amidst widespread USD selling, rising by 60 pips in response to global monetary tightening shifts and new easing and spending measures in China. This marked its strongest close since October 10. Conversely, the Euro struggled against other currencies, and the Japanese Yen also saw declines as it fell below 151.00.

In the commodities sector, both gold and West Texas Intermediate (WTI) crude oil prices declined. Gold settled at $1,978 per ounce, while WTI crude dropped to $80.92 per barrel.

Investors are now turning their attention to Friday’s jobs and ISM services reports. Should these reports reveal softer data, it could lead to an even greater decrease in yields, potentially sparking fear of missing out (FOMO) as 5% yields appear to be diminishing.

This article was generated with the help of AI and reviewed by an editor.