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Federal Reserve Leaves Interest Rates Unchanged, Maintains Monthly Asset Purchases

Real Time News
  • Update - gold extending its rally to session highs as the US Dollar continues to slide following this comment from Powell. The Fed Chair also stuck to his transitory inflation script during the presser. Meanwhile, real yields just hit new all-time lows. $GLD $DXY $XAUUSD https://t.co/GEpIKpttUs
  • Indices Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Wall Street: -0.00% US 500: -0.02% France 40: -0.09% FTSE 100: -0.13% Germany 30: -0.15% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/3OyFlMWOIP
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  • Gold price action tumbles lower as the US Dollar strengthens broadly following the Fed. Get your $XAUUSD market update from @RichDvorakFX here:https://t.co/GWJcMiM3Vd https://t.co/X8WsTFwxFx
  • Fed's Powell: - No sense of panic in regard to inflation - I do not believe wage increases are causing price inflation
  • Fed's Powell: - High inflation prints not "what we were looking for" - Spike in inflation driven solely by supply side shock
  • Fed's Powell: - We expect RRP activity to remain elevated - Repo facilities performing as expected
  • Fed's Powell: - MBS and tapering were brought up by a number of FOMC participants - We will taper both (MBS & Treasuries) at the same time most likely
  • Fed's Powell: - Strong capital requirements are a "must" for banks, especially the largest banks - Capital requirements allow banks to continue to perform during severe downturns
  • The July FOMC press conference is hammering home this point: the labor market mandate is now on equal footing with the inflation mandate (which is atypical); and Powell is now making the case that the labor mandate is *more important* to normalization than the inflation side. https://t.co/saAmTwpTRw
Crude Oil Prices Eye Chart Barrier as Markets Weigh Fed, ECB Policy

Crude Oil Prices Eye Chart Barrier as Markets Weigh Fed, ECB Policy

Ilya Spivak, Head Strategist, APAC
Crude oil up with stocks and bond yields, gold down, US Dollar up

Crude oil, gold price performance chart created using TradingView

CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices edge up in risk-on trade, but key resistance held
  • API inventory flow data rounds out barebones economic calendar
  • Gold prices retreat as markets eye FOMC minutes, Jackson Hole

Friday’s risk-on sentiment tilt carried through Monday’s session, with crude oil prices rising alongside stocks. A parallel rise in bond yields undermined the appeal of non-interest-bearing assets and weighed on gold. Impressively, the US Dollar recovered some lost ground despite its recently anti-risk profile.

All the same, the benchmark commodities made little progress from near-term ranges, as expected. That seems to reflect traders withholding conviction ahead of critical event risk: minutes from July’s FOMC and ECB meetings as well as the Fed-hosted economic symposium in Jackson Hole, Wyoming.

The weekly API inventory flow report rounds out the barebones data docket. It will be sized up against expectations of a 1.22-million-barrel drawdown in US stockpiles expected to be reported in official EIA statistics due Wednesday. Absent dramatic deviation, a strong response from prices seems unlikely.

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GOLD TECHNICAL ANALYSIS

Gold prices edged lower toward swing low support at 1480.00. A daily close below that would bolster topping cues hinted in negative RSI divergence, exposing a more substantive barrier in the 1437.70-52.95 zone next. Swing high resistance is at 1535.03, with a weekly chart inflection level at 1563.00 lining up thereafter.

Gold price chart - daily

Gold price chart created using TradingView

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices remain pinned below resistance capping gains since late April, now at 58.30. A daily close above that targets the 60.04-84 zone. Alternatively, a move below the congestion area running down through 53.95 sets the stage to challenge support near the $50/bbl figure once again.

Crude oil price chart - daily

Crude oil price chart created using TradingView

COMMODITY TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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