By Lukman Otunuga Senior Research Analyst, ForexTime
The Fed meeting overnight has seen more selling in the greenback this morning as their statement signalled that a slightly more hawkish message was largely priced in. The reaction of markets the morning after a major risk event is often telling. So, the fact that the greenback is still offered perhaps points to a more restrained Fed going forward.
FOMC wait-and-see mode remains
Chair Powell and his fellow policymakers acknowledged that economic activity indicators have continued to strengthen and the economy has made progress towards its goals of price stability and maximum employment. But especially on employment, there is still some way to go for the recovery to be substantial enough to start tapering asset purchases. Inflation is still seen as transitory but is not broadly based and Chair Powell specified that one-off price rises, even if they are not reversed, are no sustained inflation.
Many in the markets are touting the Jackson Hole symposium at the end of next month as the big date for more taper detail. But, with only one NFP jobs report next week to be released before then, is that enough information for the Fed to shift their bias? There are then three FOMC meetings left in the year in September, November and December.
China sooths equity jitters
Free Reports:
Sign Up for Our Stock Market Newsletter – Get updated on News, Charts & Rankings of Public Companies when you join our Stocks Newsletter
Get our Weekly Commitment of Traders Reports - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
Equities finished mixed in the US with tech outperforming. Facebook beat earnings expectations but warned of a significant growth slowdown and the stock fell as much as 5% in extended trading. European bourses have started the morning in the green after China took steps to calm recent investor fears which helped the Hong Kong market gain over 3%.
Gold enjoying dollar woes
With the hawks disappointed after the FOMC meeting, dollar selling is helping to push gold out of its recent range. The bullish break is now within touching distance of the widely watched 200-day moving average at $1,822. A strong close above here should see the July highs at $1,829/34 come into view fairly quickly. Solid support sits at $1,789.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
Article by ForexTime
ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com
- PBoC kept the interest rate unchanged. The US stock indices rise despite rising manufacturing inflation May 15, 2024
- Meme-stock mania: Will GameStop, AMC stocks surge even higher? May 15, 2024
- Euro climbs to five-week high ahead of US CPI data May 15, 2024
- Australia will release its annual budget today. Rising inflation expectations hurt US stock indices May 14, 2024
- JPY declines again May 14, 2024
- Trade of the Week: CHINAH to extend lead as Asia’s winner? May 13, 2024
- The German index has hit an all-time high. China sees rising consumer inflation May 13, 2024
- Brent crude oil faces downward pressure amid demand uncertainties May 13, 2024
- COT Metals Charts: Speculator bets led by Platinum & Copper May 11, 2024
- COT Bonds Charts: Speculator bets led by Fed Funds & Ultra 10-Year Bonds May 11, 2024