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FOMC

Gold consolidates ahead of FOMC minutesThe main event for today is actually the release of the FOMC minutes tonight at 19:00 GMT – for which we have gold in focus. The rise of US yields and increased expectations of a 50bp March hike mean the minutes have become of greater importance. As traders had assumed a 25bp February hike was practically a given, it could come as a surprise if we learn that the Fed were closer to opting for a 50bp hike than previously assumed – and that would likely increase bets of a 50bp hike in March, given the slew of strong US economic data we’ve seen of late. And that could be bearish for gold. Our original call for a retracement towards 1900 has worked out quite well. It didn't quite reach 1900, but it was good enough for bears to fade into a move for the anticipated wave C lower - which we still have a target of around 1800. Gold remains within a downtrend on the 4-hour chart and consolidating near its lows. You could say its leaning on the ropes, but also doing quite well considering how strong US yields performed yesterday. On the assumption that markets are sensitive to perceived hawkish FOMC minutes, I suspect gold will trey to push lower and test the lows around $1820. We may seen an initial move higher (given Friday’s bullish hammer on the daily chart), but the weekly pivot point and $1850 handle loom above – which I suspect will cap upside potential for now.
FX_IDC:XAUUSDShort
by CityIndex
Upside risks for USD/JPY continue to buildIt may have taken a few weeks, but markets are finally pricing in what we argued all along; a higher terminal rate and no cuts this year. If you cast your mind back to the Fed’s recent 25bp hike, it is fair to say the Fed were not impressed with the market’s original response. Fed fund futures not only lowered the terminal rate to 5% but even began pricing in two cuts this this. And that has all been reversed, and rightly so in our view. Fed members were quick to respond and read from the same hawkish script, with little success early on as markets continued to call ‘bulldust’ on their rhetoric. That is, until a strong Nonfarm payrolls report shook things up, as it paved the way for further hikes. Yet it has taken over two weeks, a plethora more hawkish comments and strong data for markets to slowly wake up to the fact that a higher terminal rate is the more likely path for the Fed, and for us to forget about cuts this year. And that is the scenario we have backed throughout. February data which has underscored the Fed’s hawkish stance include (but not limited to): • Nonfarm payrolls 517k (185 expected, 186k previous) • Unemployment 3.4% (3.6% expected, 3.5% previous, near historic lows) • ISM services 55.2 (50.4 expected, 49.2 previous) • CPI 6.4% y/y (6.2% expected, 6.5% previous) • Retail sales 3% y/y (1.8% expected, -1.1% previous) • Core retail sales 2.3% (0.8% expected, 0.4% previous) • PPI 0.7% m/m (0.4% expected, -0.2% previous) Fed fund futures now imply: • 76% chance of a 25bp hike in March (down from over 90% two weeks ago) • 25.5% chance of a 50bp hike in March (up from 9% two weeks ago, or 0% three weeks ago) • A terminal rate of 5.5% in June (up from 5% terminal rate after the Fed’s last meeting) • Less than a 35% of a 25bp cut in December (two cuts were being priced in after the Fed’s Fed meeting) What are we looking for in the FOMC minutes? For current market pricing to be sustained (or justified, for want of a better word) we’ll need to see a more finely balanced debate over a 50bp hike versus a 25bp in Feb or even March. Markets took it for granted that a 25bp was a given in February, so any uncertainty surrounding this assumption would knock confidence that another 25bp hike in March is a given. And that could send the US dollar and yields higher, and the stock market and gold lower. USD/JPY daily chart USD/JPY reached our upside target around the 200-day EMA / 161.8% Fibonacci projection outlined last Monday, following its false break of 130 and prominent bullish pinbar. Momentum is clearly pointing higher overall, and the recent repricing of Fed fund futures and rise in bond yields ahead of the FOMC minutes provides hope that its trend can continue (if the minutes are deemed to be hawkish, as we suspect). The high around 138 are the next major resistance level, near where another soft US CPI print and the BOJ widening their YCC band originally sent the pair lower.
Long
by CityIndex
GOLD vs DXY - Negative Correlation, meet in the middle?I've mapped XAUUSD (top) against DXY (bottom) to clearly show the almost perfect negative correlation. DXY is more extreme in it's movements, as highlighted in the recent candles. I'm expecting further strength for DXY this week, especially as FOMC speakers are all hawkish and the market is expecting a 0.5% rate hike. If this is correct then Gold will have no choice but to fall, and I'm expecting it to hit the 1775 level, due to DXY strength.
OANDA:XAUUSDShort
by Finchcliffe
USDCAD: Expecting a breakout and push up to 1.38With public holiday's in both USA and Canada tomorrow, I expect a quiet start to the week for this pair. On Tuesday it's Canada CPI which has been falling. Bank of Canada have just paused its rate rises as it expects inflation to come down to around 3% by mid-year and 2% in 2024, so if inflation continues to fall this should be negative for the CAD. On the other-hand, the DXY strength I've posted about in recent ideas seems to be materialising and I'm expecting a push up to test 105.2 - 105.6, particularly with the FED stating 'the battle with inflation certainly isn't won', and recent other economic data supporting the chances of the US avoiding recession. The FED still has room for manoeuvre and may be looking at another 0.5pt hike in the pending FMOC minutes, which will be good for the dollar. From a technical perspective, price is bouncing off the 200MA (8hr) and above the 50MA and 100MA, which are about to cross, and so I am bullish bias. If the fundamentals play out as I expect, I'll be looking to get in long on this pair before the breakout of a quick for a quick scalp, and then monitoring for a rise up to 1.38 following the break and retest.
Long
by Finchcliffe
4
Reduce inflation rate from 6.5% to 3% this years, says WilliamsFOMC's Williams speech did not do much, as he was echoing what Jerome Powell already said 2 days ago. Rate hikes to resume, but at slower pace. Williams mentioned that inflation rate in the US should cool off to 3% this year, now at 6.5%. That's 50% lower. Question is, how much more rate hike is required to push inflation down by 50%? Will that be somehow somewhat slowdown the US economy as a whole? A whole lot more tightening will need to take place, as I see it. Lending has already begun to tighten and credit is more difficult to obtain due to stricter requirements by banks. Hmm... how will this play out? By Sifu Steve @ XeroAcademy #usdollar #usd #dxy #interestrates #useconomy #federalreserve #FOMC #inflation
TVC:DXY
by XeroAcademy
GOLD SHORT TERM INTRADAY IDEAIntraday Analysis - ( 9 FEB 2023 ) Price still trading in a range, range plays are always valid however will be looking for break outs in days to come. HRHR sells 1902 / 1897 regions MRMR sells breaking back below 1876 Safest sells below 1860 A break of 1860s, will be targeting minimally 1830s giving us a solid 300+ pips with 1845 as a first target. Scalp buys are valid in this range however will be more incline to take buys above 1886.5. HOWEVER LOOK OUT FOR 1890 PSYCHOLOGICAL KEY LEVEL.
FOREXCOM:XAUUSD
by CJ_GOLDPIPS
2
US30 Intra-Week Analysis Feb 7th, 2023Last week on us30 we saw price breakout bullish to test 34300 as it priced in the 25bps rate hike and dubbish tone from Jerome Powell during the FOMC speech. We then continued trading back in the range between 33800-34100. This week we begin with minimal volume in anticipation for another FOMC meeting today where they will discuss whether they will maintain this dubbish narrative causing price to continue bullish or be more aggressive driving price to continue bearish. Based on how the market digests this info we are looking for buys above 34100 and sells below 33400.
U
by Itskaleel
GOLD LAYOUT FOR TODAYGold is currently consolidating between 1880-1860 and is in a non-trading range. If there is a break below 1860 and it is confirmed as resistance, go short with a target of 1843.800 and 1835.550. On the other hand, if there is a break above 1870 and it is confirmed as support, go long with a target of 1903.035 and 1917.865. Keep in mind that today is the FOMC speech of Powell, so be cautious and avoid taking random trades. Adopt a sniper-like approach for precise entry points. Stay ahead of the curve with our analysis. Unleash your trading potential with our in-depth analysis of the gold market. Stay ahead of the game with our latest insights.
OANDA:XAUUSD
by arpitjain11
Fight or Flight?On February 1st, the Federal Reserve (Fed) announced a widely-expected 25bps rate hike. This was the rallying cry for the current market rally to continue. Is this confidence warranted? An interesting note is that the FOMC meeting minutes and the associated press conference appeared contradictory in nature because there was not a straightforward hawkish or dovish narrative across both. The statement was hawkish. Meanwhile, Fed Chairman Powell’s language in the press conference was remarkably dovish, describing the disinflation process as having started and as "encouraging and gratifying". This was the point that markets took as the signal to continue the recent rally. Precious metals, equities, and risk assets have all seen significant post-meeting relief. The first innings of a recession always appear to be somewhat of a soft landing in which inflation and growth begin to slow gradually. Yesterday’s meeting echoed the idea that recent indicators point to a modest increase in spending and that inflation has eased, precisely what the first innings of a recession would predict. As markets, potentially shortsightedly, adopt the soft landing narrative, the Fed’s lack of pushback against easier financial conditions added fuel to the fire. Given this, it is doubtful that markets will stop rallying until one of two cases occurs: First, if data comes in hot, it potentially frightens markets into thinking the Fed will turn back hawkish and raise rates more than the recently observed 25bps hike. The second scenario is the other extreme. Should data start coming in highly recessionary with lower inflation and weak growth, this will eliminate all believers in the soft landing narrative, thus halting the rally. However, at present, it looks like the market rally of 2023 could continue until either of these scenarios happen. An important thing to note is that whenever inflation has exceeded 5% in the past, it has never come back down without the Federal Funds Rate exceeding the rate of CPI inflation. Considering the Federal Funds Rate is currently between 4.5% and 4.75% whilst CPI inflation is at 6.5%, more rate hikes are on the horizon unless data comes in highly recessionary. CPI data on the 14th of February will provide significant insight into whether or not the Fed will follow the likes of the European Central Bank & Bank of England and go with a 50bps hike rather than a 25bps hike. Another important thing to note is that Apple , Amazon , and Alphabet (the parent company of Google ) all missed earnings last night. If three of the world's largest companies missed earnings, it does not breed confidence for economic hopes of avoiding a recession. One thing seems certain, the S&P500 is likely to take a hit when the NYSE opens later today.
by Coinrule
22