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Today, we took a look at a number of markets ahead of today’s FOMC meeting. The Fed is expected to raise rates by 25 bps, and with that barring an unforeseen deviation from this expectation (i.e. no raise/50 bps), the market will be focused on what Yellen has to say, the Fed’s economic projections and expected glide path for rates moving forward. We will take a reactionary stance, but do have some potential trade set-ups on our radar.
We looked at the US Dollar Index (DXY), focusing on how things play out with EURUSD, AUDUSD, NZDUSD, USDJPY & USDCAD. We peeked at GBPUSD, but our interest there remains muted at this time.
Looking to cross rates, a couple involving AUD are on our radar – EURAUD as it sits precariously on support in a developing descending wedge and AUDJPY trading at a big resistance zone.
Turning to precious metals, gold is stuck in a descending channel which continues to keep it pointed squarely lower. This keeps us on the bearish side of the tape until it can either break above the upper parallel or later we see a capitulation-style sell-off take place. Silver is looking much healthier than gold, but still faces stiff resistance in the low-17s.
Crude oil broke out above a pretty significant barrier, and as long as it can stay above the 51/52 area we are cautiously bullish, with potential to rise above 60.
The DAX, Nikkei 225, and S&P 500 have all been on a tear, putting them in the ‘no short’ zone, but difficult to buy at this juncture with swing trades as an intention. A pullback/consolidation period is desired to turn us more constructive from a risk/reward standpoint. Day-traders can still look to take trades from both sides of the tape, but keep in mind momentum is still from the long-side. The FTSE 100 has been a laggard, but has a decent technical backdrop for trading up to previous record highs as long as a couple of key spots not far below continue to act as support.
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---Written by Paul Robinson, Market Analyst
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