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02.10.202314:39 Forex Analysis & Reviews: US premarket on October 2: Markets on tenterhooks ahead of Powell's speech

US stock index futures extended Friday's sell-off and are trading well in the red as the risk of further interest rate hikes by the Federal Reserve faded. Futures on the S&P 500 were down 0.3%, while the tech-heavy NASDAQ declined by about 0.5%. The bond market also suffered a large sell-off, with the 10-year Treasury yield returning to its highest level since 2007, rising by five basis points to 4.62%.

Exchange Rates 02.10.2023 analysis

Investors will focus on Federal Reserve Chairman Jerome Powell's speech, trying to find clues on future interest rates. Powell is scheduled to speak at a roundtable discussion along with Philadelphia Fed President Patrick Harker. Their views will be particularly interesting after New York Fed President John Williams suggested on Friday that interest rates should remain high for some time.

Last week, a number of Fed officials made it clear that they shared the majority view that rates would need to be raised another quarter point this year. All this overshadowed optimism that US lawmakers reached a deal over the weekend to avoid a government shutdown. Meanwhile, interest rates and the Fed's hawkish stance will remain the main drivers of risk for the market in the coming weeks.

Meanwhile, European indices were lower due to a drop in pharmaceutical stocks. The US dollar rose against risk assets and briefly touched a yearly high of 149.82 against the yen after the Bank of Japan said it would conduct an additional bond-buying operation.

Exchange Rates 02.10.2023 analysis

Oil rose on bets that global demand would continue to outpace supply.

As for the S&P 500, demand for the index remains weak. Bulls need to take control of $4,304 and $4,332 to cancel the bear market. From this level, they may push the price to $4,357. Bulls also should take control of $4,382 to restore a market balance. If the index declines on the back of decreasing demand for risk appetite, bulls will have to protect $4,268. Breaking through this level, the trading instrument may plummet to $4,229 and $4,202.

*A análise de mercado aqui postada destina-se a aumentar o seu conhecimento, mas não dar instruções para fazer uma negociação.

Jakub Novak,
Analytical expert of InstaSpot
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