The USD continued to fall on expectations of a Fed rate cut on Tuesday, benefiting most stock markets around the world and gold.
The AUD was up again on Tuesday, lifted by hawkish comments from its new governor in the minute that followed the decision to raise rates by 25 basis points to 4.35% a fortnight ago. Michele Bullock said that while there is a plausible case for keeping rates steady, board members see a risk that inflation expectations could rise if rates are not raised. The Banking Council also noted that the Reserve Bank of Australia’s (RBA) cash rate remains below the key rates of many other countries. Markets are pricing in just a 5% chance it will rise again in December, but suggest around a 40% risk it could move once more in the new year.
Canadian CPI data
It’s quieter on the economic data front, but investors will be watching for inflation updates from Canada with the lowest October consumer price index (CPI) release. At 1:30 p.m., markets expect Canada to post a 3.2% year-over-year price increase, down from 3.8% in the previous month.
Several macroeconomic indicators are expected in the US. Starting at 1:30 PM with the Chicago Federal Reserve (Fed) National Activity Index, followed by existing home sales for the month of October. Economists are forecasting a 1.3% drop from September.
But currency traders are really waiting for the minutes of the Federal Open Market Committee (FOMC), which were exceptionally released a day early, due to Thanksgiving Day. The minutes are seen by some as a potential key in Fed policy. After last week’s CPI, many revised their expectations to the point that about 30% of them believe the Fed could start cutting rates as early as March next year.
Zoom Video communication
Shares of Zoom Video Communications rose in extended trading after the company raised its annual revenue and profit forecasts, boosted by demand for its new Al products introduced during the third quarter. Zoom earned $1.29 per share on an adjusted basis, beating expectations of $1.09. Revenue also beat expectations, coming in at $1.14 billion, up 3.2%. It now expects annual adjusted earnings per share between $4.93 and $4.95, up from its previous forecast of $4.63 and $4.67. It also raised its revenue forecast.
Al-tech giant NVIDIA reports after market close. The AI leader is expected to deliver the next market revenue forecast. But attention will turn to whether expanding US limits on sales of its high-end chips to China could put a damper on that run. The Street sees earnings of $3.36 per share on revenue of $16.18 billion. The results will also be a major test for the Al-driven rally that has helped kick-start the US stock market this year, with the Philadelphia semiconductor index up nearly 50% in 2023.
HP is also scheduled to announce its fourth-quarter earnings after the closing bell in the US. Wall Street analysts also expect HP to report quarterly earnings of $0.90 per share, up 5.9% year-over-year, in its upcoming report. The revenue estimate is $13.82 billion, indicating a decline of roughly $1 billion in the year-ago quarter.
Most of this drop in sales will come from the group’s personal systems division, which is the part of the business that makes desktop computers and laptops. The division is expected to lose 9.8% of revenue compared to last year. HP tried to reassure the market a month ago when it said it expected PC demand to stabilize by the end of the year and announced a 5% dividend hike.