The demand for the US Dollar has surged, impacting currency pairs as traders exercise caution ahead of key Federal Reserve (Fed) policy announcements. In European trading on Wednesday, the GBP/USD pair held steady near 1.2450, reflecting the market's cautious stance. The financial world is watching closely as major tech companies Meta, Microsoft, and Tesla prepare to reveal their quarterly results after the bell. Additionally, the Bank of England (BoE) Governor Bailey's testimony and the Fed policy decision loom on the horizon.
The resurgent US Dollar and a negative shift in risk sentiment have placed pressure on currency pairs, causing them to dip. The Federal Reserve is widely expected to maintain its current rates, offering no surprises later in the day. Meanwhile, anticipation mounts around the Bank of Canada (BoC), which is predicted to cut its rate by 25 basis points. The European Central Bank (ECB) is likely to follow suit when it meets tomorrow.
In the Southern Hemisphere, Australia's latest inflation data is set to be released on Wednesday. Analysts expect price pressures to have eased further towards the end of 2024, prompting speculation of a potential Reserve Bank of Australia (RBA) interest rate cut in February.
In equity markets, the AI sector saw a reversal, with Nvidia shares soaring nearly 9% after a previous selloff. ASML also announced better-than-expected results, potentially boosting investor sentiment. Dogwifhat experienced a notable rise, trading 20% higher at over $1.26 after testing a crucial psychological level of $1 on Tuesday.
Tech giants Amazon, Meta, Alphabet, and Microsoft are projected to invest up to $300 billion in artificial intelligence this year. However, forecasts suggest earnings growth could slow to under 20% by 2025.