Markets brace for Fed rate cuts as Nasdaq and ASX 200 show resilience

(AI video summary)

This video was created on 17 September for IG audiences by ausbiz.

From record highs to rate cut speculations

Markets are eyeing a potential interest rate cut by the Federal Reserve (Fed) this week. Although United States (US) markets showed some weakness, the US Tech 100's (Nasdaq) dip was minimal, reflecting its recent strength.

The focus is on whether there will be two or three rate cuts this year, including the expected one tomorrow. Fed Chair Jerome Powell's tone on economic risks is crucial. Any 'buy the rumour, sell the news' effect may be short-lived, as further cuts in October and December remain possible.

Nasdaq's continued resilience and ASX 200 expectations

The Nasdaq has experienced remarkable gains, even as it enters an Elliott Wave framework 'wave five,' with a possibility of reaching 25,000. The weekly close will be crucial in determining if this upward trend continues.

Meanwhile, the Australia 200 (ASX 200), at 8844, saw a breather after setting new highs. Expectations are for a potential 5% pullback towards 8620 before resuming its uptrend.

Aussie dollar's cautious path

The Australian dollar is testing the $0.67 level, constrained by trend channel resistance and the 200-week moving average at $0.6680. A weaker United States (US) dollar could push the Australian dollar to $0.70 by year-end.

Commodities

• Crude oil

Crude oil prices rose by 2% overnight, held by the $61.45 double low, and are pushing towards the $66 resistance zone. Geopolitical factors, including Ukrainian drone strikes on Russian energy infrastructure, coupled with the rate cut cycle, suggest further upward pressure, potentially breaking the $67 level.

• Gold

Gold remains robust at record highs above $3700, attracting institutions and private investors. With the market overbought, any pullback will likely offer buying opportunities.

Bitcoin's outlook

Bitcoin lags behind gold and the Nasdaq but could test its $124,000 high if the Federal Open Market Committee (FOMC) meeting proceeds smoothly. Despite lagging, Bitcoin holds potential for further gains as market conditions change.