The US dollar strengthened against the G10 peers ahead of tonight’s FOMC meeting, in which markets widely expect the Fed to give a go-ahead to the long awaited interest rate hike and paint a clearer picture of the monetary policy stance towards next year.

The likelihood of Dec rate hike, according to CME’s FedWatch tool, is now standing at 100%. This contains 87.6% probability of a 25bps hike and 12.4% of a 50bps hike.

What matters more is probably the Fed statement after the meeting, in which investors and traders will try to find clues of how the central bank approaches to strike the right balance between jobs and inflation.

Another three hikes are widely expected in the year of 2018 against the backdrop of booming jobs market and improved economic conditions globally. This expectation, however, is undermined by concerns of tepid inflation, which is still below the central bank’s target of 2%. The progression of the massive tax overhaul is going to play a key role as well, as tax cut will boost corporate earnings, wage gains and spending and thus will raise the future inflation outlooks.

Asian markets pulled back yesterday after a two-day rebound. Weakness came through the Shanghai Composite, in which profit-taking activities smashed market participants and panic selling was spreading over to Hong Kong and other Asian markets. Shanghai Composite tumbled 1.25% on Tuesday, forming a ‘bearish engulfing’ pattern in its daily chart. 

Hang Seng Index lost 171 points or 0.59% to 28,794 points yesterday. Technically, the 10 Day SMA and SuperTrend (10,3) both remain in bearish set-up and we need to wait until both indicators to flip upwards in order to confirm a bullish reversal.

The price of the second and third largest cryptocurrency, namely Ethereum and Litecoin, skyrocket after the debut of Bitcoin futures on Cbot this week. Ethereums’ price surged 50% from a week ago and Litecoin soared 255% during the same period. No fundamental justification could explain this phenomenon but it seems that the ‘cryptomania’ is far from ending.

Technical Analysis:

US SPX 500 - Cash

  • Breaks out above 100% Fibonacci Extension level of 2,638 area
  • Trend indicator 10-Day Simple Moving Average and SuperTrend (10,3) both sloped upwards, suggesting the near term trend is bullish
  • Next major resistance level could be found at 2,724 area

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