S&P500
The correction continues. Fed's decision is due.
On Tuesday, the US market tried to recover after a strong fall over the previous two days. US stock indices rose nearly 1% on morning. However, large funds took advantage of this gain for a new wave of selling and the market fell to or below opening prices by the close. The Dow fell by 0.15%, the NASDAQ rose 0.2%, and the S&P 500 dropped by 0.1%.
Asian stock market: Japan's and China's indices fell 0.6% on Wednesday.
Commodity market: Brent crude futures are gaining 1.5% at $74.40 a barrel. Prices were supported by a significant new decline in US oil inventories, which fell 6.1m barrels for the week. The OPEC agreement appears to be implemented by participating countries and supply cuts amid a gradual recovery in demand creates a deficit in the global market. At the same time, strong growth in US shale oil output probably requires higher prices.
The S&P500 index is at 4,354 and is expected to trade in the 4320–4380 range. The housing market in the US is still hot. US housing starts increased more than expected in August. It rose to 1.615 million in August from 1.534 million in July. Building permits in the United States jumped to 1.728 million in August, which was also more than expected. The S&P500 index futures were up about 0.5% at the open. The highlight of the week and month is today's Fed's monetary policy decision. The market awaits information on the timing and pace of Federal Reserve System tapering. It will also carefully analyze the Fed's statement on the current state of the US economy.
The issue of reaching the national debt limit has been raised again in the US. It has been growing for decades and, by law, the government is required to obtain congressional approval to raise its limit. Yesterday, Congress extended government funding through December 3 and included a suspension of the debt limit through December 16, 2022. Republicans opposed raising the national debt limit to fight the Biden administration's tax and spending increases. However, the US national debt is still a problem.
The US dollar index is trading at 93.20 and is expected to be in the 92.90–93.50 range. The dollar trades in a narrow range ahead of the Fed's decisions tonight. They are mostly in favour of the dollar, but there is always uncertainty about the market sentiment.
USD/CAD is trading at 1.2780 and is likely to be in the 1.2700–1.2880 range. The pair remains at high levels, but if the dollar starts to fall after the Fed decision, the loonie will rise on high oil prices.
Conclusion: the market awaits the Fed's monetary policy decision.
