UBS: Another Fed Rate Hike Expected in December

UBS's expectation of an additional Fed rate hike in December is a negative signal in the short term for risk assets and growth stocks. GOOGL has risen 2.7% in the last 24 hours and its RSI at 63 is approaching overbought territory; this sets the stage for profit-taking that the news could trigger. The MACD is positive and the price is above the SMA20/SMA50, so the technical picture remains strong; therefore, the bearish signal may remain weak. The rate hike expectation could create valuation pressure on tech stocks, but GOOGL's strong trend may limit the impact of the news. A mild downward reaction is possible in the 1-3 day horizon, but a sharp sell-off should not be expected.

UBS's expectation of another Fed rate hike in December is mildly supportive news for the DXY in the short term. Already, the DXY closed at 100.49, above its 20-day and 50-day simple moving averages, with RSI14 at 62, indicating positive momentum but approaching overbought territory. The MACD line is just above the signal line, suggesting that upward momentum is maintained. However, the rate hike expectation may already be priced in; therefore, the impact could be limited. In the 1-3 day view, I expect a moderate upward trend, but the 100.50-100.60 resistance zone may be tested.

The SPX has risen 2.04% in the last 24 hours to reach 7764, with RSI14 at 74.6, indicating overbought conditions. UBS's expectation that the Fed will implement another rate hike in December could dampen risk appetite in the short term. However, the price remains above the 20- and 50-day moving averages and MACD is in positive territory, suggesting that selling pressure may be limited. Combined overbought conditions and hawkish Fed expectations point to a slightly bearish outlook for the next 1-3 days. Nevertheless, the news alone is not a strong trigger for a significant decline; potential profit-taking may remain limited.

UBS's expectation of another Fed rate hike in December increases the likelihood of USD appreciation in the short term. For the USDTRY pair, this implies upward pressure against the Turkish lira. However, current technical indicators point to a sideways trend: RSI is neutral around 56, MACD is very close to the signal line, and the price is just above the 20 and 50-day moving averages. Since the 24-hour change is nearly zero, the market may not have priced in this news yet. Therefore, the impact is limited and upward, but additional confirmation is needed for a strong breakout.