The Fed could refrain from giving further insights into its policy after cutting rates
US stocks advanced on Friday as risk demand dominated global markets ahead of the weekend. The S&P 500 added more than 0.5% to settle less then 1% from its historic high registered in July. The Dow Jones rallied 0.72% and the tech-heavy Nasdaq gained 0.65%. Tech and semiconductor stocks were leading the gains after a solid sell-off seen during the previous week. For the week, the S&P 500 added 4%, the Nasdaq Composite jumped nearly 6%, and the Dow advanced 2.6%.
Investors are now shifting focus to the Fed’s policy meeting due on Wednesday. The central bank is widely expected to cut rates by 0.25% while some market participants also suggest the bank may announce a larger cut by 0.5%. Dovish expectations were reinforced by a slower inflation and a weaker jobs market. However, the Federal Reserve could refrain from giving further insights into its policy after cutting rates, which could be disappointing for investors. Anyway, the key event would bring fresh bouts of volatility both in stock and currency markets.
As for currencies, the US dollar finished lower for the second week in a row as traders opted to take some profit ahead of the weekend. The USD index slipped from local highs seen marginally below the 102.00 figure to finish around 101.10, down 0.25% on the day. Furthermore, the USDJPY pair plunged to fresh 2024 lows in the 140.30 as the greenback weakened across the board after former Federal Reserve Bank of New York President Dudley said there is still a possibility for a 50-basis-point interest-rate cut next week. On Monday, the USD saw fresh losses to find a local support around 100.75.
Elsewhere, gold futures rallied to fresh all-time highs above the $2,600 figure. The XAUUSD pair peaked at $2,614 to finish the day and the week above the psychological level. The bullion derived support from a weaker dollar in combination with market uncertainty ahead of a Fed meeting. Also, rising bets on a 0.5%-rate cut added to demand surrounding the yellow metal. Despite the overbought conditions, gold futures may see fresh historic tops in the days to come if the US central bank delivers a bigger rate cut. On Monday, the metal refreshed all-time highs around $2,617, staying resilient amid reports about a second assassination attempt on Republican presidential nominee Donald Trump.
