Today’s FOMC was no shook to anyone at the end of the day as the FED talked up the prospects of the labour market and how consumer consumption is still on track, but the every present question about inflation still remained below the 2% mark. This presents a slight headache for the FED as it looks to raise rates in the long run, but there forecasts predict it picking up in the future. Business investment has also been soft, but this has been in the face of global uncertainty is likely to continue in the short term knowing how volatile things have been. What it does show is that the FED is looking to push interest rates up in the long term and the doves will so begin to wane in the current economic climate if it continues to be upbeat and positive.
On the equity charts as I predicted yesterday the resistance level at 2167 has so far held very strong and is acting as a ceiling for any further upward movement. The somewhat positive news from the FOMC today points towards a push towards interest rate rises and the likelihood that the market will look for returns outside the equity markets. Certainly in this case fixed interest might very much be the future given the recent equity ratios which are paying very low compared to their prices. When it comes to movements lower, support can be found at 2119 and 2052. These key levels will be where traders will be aiming to take profit on large movements lower as the FED picks up pace with its hawkish tone in the coming months.
Oil continues also to come under pressure as the USD lifts higher and as global growth continues to be a strong worry for traders out there. It was also dealt another blow today as the recent oil inventory data out of the US showed a surplus of 1.67M barrels, this has put pressure back on oil markets all together and the large drops we have seen are now threatening to push oil back down towards the 35 dollar a barrel mark. But in the medium to short term the next level down is looking more and more like the 37.81 support level, which will act as a very strong level for large movements lower. This coupled with the strong USD could lead to further moves even lower than 35 dollars a barrel and even push back into the top 20 dollar region.
Lastly, Japan continues to be at the tip of everyone’s tongue in the market place, as pressure builds on the Bank of Japan to act in the wake of the recent fiscal announcement from Shinzo Abe. It looks certain that they will both act in tandem and this Friday will be the day to see all. A strong result would see the USDJPY jump sharply, but right now markets are in the dark so it certainly could be a case of expect the unexpected.