The Fed is widely expected to leave rates on hold despite the strong economy and tight labor market
US stocks finished mixed-to-lower on Friday as recession fears reemerged, pressuring equities and pushing the S&P 500 into correction territory. The index fell nearly 0.5%, closing more than 10% lower from this year’s high seen in late July. The Dow Jones gave up 1.12%, pressured by the news that JPMorgan CEO Jamie Dimon plans to sell 1 million shares next year. The bank’s shares plunged more than 3.5% in response to the reports. Meanwhile, the Nasdaq Composite finished 0.38% higher as Amazon rallied after the company exceeded expectations for revenue and earnings in the third quarter.
Meanwhile, the US dollar finished unchanged on Friday to close positive on the weekly charts. The USD index managed to bounce back above the 106.00 handle after some corrective attempts that were capped around 105.35. Still, the greenback lacked the momentum to challenge the 107.00 handle that remains the key nearest bullish target for the US currency at this stage. Traders now shift their focus towards next week’s Federal Reserve decision to receive further clues on the central bank’s next steps.
The Fed is widely expected to leave rates on hold despite the strong economy and tight labor market. Also, the recent spike in Treasury yields prompted a tightening of financial conditions throughout the economy. As for fresh economic data, the focus will be on the ADP private employment report and Nonfarm Payrolls. Following September’s jump of 336,000, the market is expecting a much weaker outcome of 175,000 in October.
In other markets, gold prices rallied on Friday to derail the $2,000 psychological level for the first time since mid-May. The XAUUSD pair peaked at $2,009 to finish just slightly below fresh multi-month highs. The bullion saw the third bullish week in a row and looks ready to extend the ascent in the near term. However, should the Fed express a hawkish tone during the upcoming meeting, the yellow metal may lose some ground amid a potentially stronger dollar. Anyway, the overall technical picture stays upbeat while above the key SMAs. On the other hand, overbought conditions suggest gold may see a local downside correction before resuming the ascent.