Wall Street Bullish on Tech Rally

• Wall Street was robust with a fresh tech-rally, with Dow Jones recording a new all-time high.

• FOMC meeting minutes suggest a bigger size rate cut is less likely and buoy the dollars strength.

• Gold declined to a new low in October amid the strengthening of the dollar.

Market Summary

 while Wall Street reached another all-time high, driven by a fresh tech rally led by companies like Apple Inc, Amazon, and Netflix. However, traders should closely monitor today's CPI reading, as a higher-than-expected result could place pressure on the equity market and further strengthen the U.S. dollar.

The FOMC meeting minutes, released yesterday, revealed that the majority of board members favoured a larger rate cut. However, the minutes also indicated that a 50 bps rate cut is unlikely, as several officials prefer a more gradual approach to monetary easing. Meanwhile, Pound Sterling remains lacklustre, with traders eyeing tomorrow‘s GDP reading, which is expected to potentially boost the currency’s strength.

In the commodity market, gold prices declined to a new low for October, weighed down by a strengthening dollar, and the FOMC minutes hinting at a more hawkish stance from the Fed worsened the outlook for the precious metal. Conversely, oil prices edged marginally higher as traders await Israel's response to attacks from Iran-backed military groups. However, a surprise increase in U.S. crude inventories by over 5 million barrels, the largest since April, could exert downward pressure on oil prices.

Current rate hike bets on 7th November Fed interest rate decision:

Source: CME Fedwatch Tool

-50 bps (7%) VS -25 bps (93%)

Market Movements

DOLLAR_INDX, H4

The Dollar Index has extended its gains as investors await the release of crucial U.S. CPI data. Following a breakout above a significant resistance level, the dollar remains bullish, although its momentum may be tempered by the dovish tone of the latest FOMC meeting minutes. While the majority of the Monetary Policy Committee (MPC) members lean toward a 50-basis-point rate cut, recent upbeat U.S. jobs data has prompted some to consider a smaller, 25-basis-point reduction. The dollar‘s trend remains uncertain, and the upcoming CPI and PPI reports are likely to provide more clarity on the Fed’s next move.

The Dollar Index is trading higher following the prior breakout above the previous resistance level. However, MACD has illustrated increasing bearish momentum, while RSI is at 73, suggesting the index might enter overbought territory.

Resistance level: 103.25, 104.05

Support level: 102.55, 101.80

XAU/USD, H4

Gold prices initially rebounded after the Fed released dovish FOMC meeting minutes but have since resumed a bearish trend as investors anticipate the U.S. CPI and PPI data later this week. With the market now largely expecting only a 25-basis-point rate cut, the dollar's appeal has strengthened, weighing on gold prices. The mixed expectations regarding the Fed's policy stance have left investors in a “wait-and-see” mode, with inflation data expected to be a decisive factor for golds near-term direction.

Gold prices are trading lower while currently testing the support level. However, MACD has illustrated increasing bullish momentum, while RSI is at 42, suggesting the commodity might enter oversold territory.

Resistance level: 2630.00, 2640.00

Support level: 2605.00, 2590.00

Hang Seng (HK50), H4

After two consecutive sessions of sharp declines, the Hang Seng index posted a technical rebound, filling the gap from its prior uptrend. This suggests that the index may resume trading within its previous bullish trend. Meanwhile, Wall Street rallied yesterday, with the Dow Jones reaching a new all-time high, which helped boost risk-on sentiment across global markets. This positive momentum has spilled over into the Asian equity markets, providing a lift to the Hang Seng index as well. Traders may continue to monitor global risk sentiment as it plays a key role in sustaining the upward trajectory.

The Hang Seng index has broken above the gap after a technical correction, suggesting a bullish signal for the index. The RSI shows a sign of rebound, while the MACD continues to decline, suggesting that the bearish momentum is easing.

Resistance level: 21830.00, 22430.00

Support level: 20880.00, 20320.00