Today’s US Federal Reserve meeting outcome and Jerome Powell's speech will be closely watched around the world. Market fully pricing in and expect a 25bps interest rate hike for the eleventh time since March 2022 and we do believe this will be the case today. According to FedWatch, the market is pricing in a 99.8% likelihood that the FED will raise rates by 25bps today.
However, the investors should pay close attention to the FOMC Statement regarding the outlook regarding comments on inflation and comments from Jerome Powell about the central bank’s view of the economic outlook as well as clues about the future path of rate hikes. Becasue U.S. inflationary price pressures showed a decrease recently while the labour market has cooled off but remains strong. The FOMC Statement and projections are set to be released at 18.00 GMT. Along with this release will see the FED chair Powell Conference 30 minutes after at 18.30.
Wall Street will have a busy day today. Major US indices are holding impressive gains ahead of the FOMC outcome. During the previous session, US indices ended slightly lower as traders turned more cautious ahead of the key policy decisions from the major central banks. On the earnings front, the Facebook parent Meta Platforms (NASDAQ: META) is scheduled to announce its latest quarterly earnings today after the markets close.
Crude oil prices reached a fresh 3-month high on Tuesday. Today oil futures trades modestly lower after the API data showed the US Crude Oil Inventories unexpectedly rise last week. The API data showed that US crude inventories increased by 1.319 million barrels last week, defying expectations for a 1.969-million-barrel decline. Moving ahead, the Fed meeting outcome and EIA weekly crude inventory data will be key to deciding the further price movement for oil prices.
In the currency market, the king dollar is continuing its struggle to rise. The dollar index, which tracks the currency against key rivals rose to a fresh two-week high of 101.60 on Tuesday but failed to extend the gains as traders across the globe wait for the result of the Fed meeting outcome to get a clear picture of the greenback's long-term direction. As of this writing, the DXY hovers near the 101 area.
The precious metal jumps back above $1970 lifted by expectations that the global central banks will slow down its tightening campaign in the coming months. However, investors should closely monitor the comments from Fed chair Powell and ECB president Lagarde this week for language and know the direction for the coming months. Gold is highly sensitive to rising interest rates since higher rates dent gold's appeal as they increase the opportunity cost of holding non-yielding bullion.
On the data front, US Consumer Confidence comes in stronger than estimated for July. US Consumer Confidence Index jumped 6.9 pts to 117.0 in July, compared to the expectation of 111.8 and was the highest since July 2021.
Moving ahead today, the important events to watch:
US – New home sales: GMT – 14:00
US – FOMC interest rate decision and statement: GMT – 18:00
Technical Outlook and Review
EURUSD: The currency pair rebounded back to above 1.1080 during the European session. For today, the first resistance is located for the pair at around 1.1110, a break above this level will confirm a possible move to 1.1150/70. On the flip side, a breakdown through 1.1020 would negate that bias and suggest a test of the 1.0980/70 support regions.
The important levels to watch for today: Support- 1.1110 and 1.1150 Resistance- 1.1020 and 1.0980.
GOLD: For today, considering heavy volatility there are chances the metal can rally back to above the key resistance of 1988. On the downside, any meaningful pullback now seems to find some support near the 1960 zones, below which the slide could further get extended towards the 1952 and 1948/47 regions.
The important levels to watch for today: Support- 1960 and 1948 Resistance- 1978 and 1995.
Quote of the day – “Do not anticipate and move without market confirmation - being a little late in your trade is your insurance that you are right or wrong.” - Jesse Livermore.