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10/06/21 10:53
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The Fed hit the pause button, holding interest rates at a 22-year high; policymakers upgraded their GDP outlook and reduced the core PCE projection for the year, while gold and the US dollar went in different directions. Source: Bloomberg Forex Federal Reserve Inflation Interest Interest rates Interest rate Diego Colman | Market Analyst, New York | Publication date: Thursday 21 September 2023 06:11 Fed delivers to market predictions The Federal Reverse (Fed) today concluded its highly anticipated September meeting, unanimously voting to keep its benchmark interest rate at a 22-year high within the range of 5.25% to 5.50%, in line with Wall Street expectations and market prices. The move to uphold the present position reflects a commitment to a data-driven approach, with a focus on assessing the impact of past actions on the broader economy. In alignment with this perspective, Chair Powell has unequivocally stated recently that the central bank’s policy stance “will depend on the economic outlook as informed by the totality of the incoming data”. To provide some context, the Fed has raised borrowing costs 11 times since 2022, delivering 525 basis points of cumulative tightening to contain elevated price pressures. This strategy seems to be yielding results, albeit at a gradual pace. At its peak last year, annual inflation exceeded 9.0%, but has since slowed 3.7%, a welcome improvement, but still too high relative to the 2.0% target to declare victory. August headline and core US inflation chart Source: BLS FOMC policy statement In its communiqué, the Fed struck a positive tone on growth, noting that economic activity has been expanding at a solid pace, a subtle upgrade from the previous "moderate" characterisation. The optimism was bolstered by comments on the labour market, which underscored that job gains have slowed but remained strong. Regarding consumer prices, the statement noted that inflation remains elevated and that policymakers will be “highly attentive” towards the associated risks, mirroring comments from two months ago. Shifting the spotlight to forward guidance, the language remained the same, with the Fed noting that it would consider various factors “in determining the extent of additional policy firming that may be appropriate to return inflation to 2% over time”. Keeping this guidance unchanged might be a strategic move to preserve maximum flexibility should additional actions become necessary in the future. Summary of economic projections GDP, unemployment rate and core PCE The September Summary of Economic Projections revealed significant revisions compared to the estimates provided in the previous quarter. First off, gross domestic product (GDP) for 2023 was upgraded to 2.1% from 1.0% previously to reflect the economy's enduring resilience and continued robustness. Looking ahead to 2024, the GDP outlook revised upwards, from 1.5% to 1.1%, thereby alleviating any concerns about an imminent recession. Directing our focus to the labor market, policymakers foresee an unemployment rate of 3.8% in 2023, down from 4.1% in June. With regard to inflation, the core PCE forecast for 2023 was marked down modestly, dropping to 3.7% from the previous 3.9%. Meanwhile, the projection for 2024 held steady at 2.6% Fed dot plot The dot plot, which illustrates the anticipated trajectory of borrowing costs across multiple years as envisioned by Fed officials, remained somewhat consistent with the version presented in June. That said, the median interest rate projection for 2023 stayed unchanged at 5.6%, implying 25 basis points of additional tightening this year. For 2024, the US central bank sees interest rates inching down to 5.1%, marking a shift from the 4.6% projection in the previous dot plot. This signals a reduced level of easing in the forecast, suggesting that interest rates are expected to persist at elevated levels for a longer period. Federal Reserve's updated macroeconomic projections chart Source: Federal Reserve Hawkish approach good for the dollar In the immediate kneejerk reaction, gold prices erased some of its session gains, as US Treasury yields and the US dollar drifted upwards. Overall, the Fed's hawkish monetary policy outlook should be positive for the greenback and rates in the near term, creating a challenging backdrop for precious metals. In any case, Powell’s press conference may offer more insight into the central bank’s future steps. Dollar, yields and gold prices chart Source: TradingView This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. -
By tradinglounge · Posted
Elliott Wave Analysis TradingLounge Daily Chart, 21 September 23, Etheruem/U.S. dollar(ETHUSD) ETHUSD Elliott Wave Technical Analysis Function: Reactionary(Counter Trend) Mode: Corrective Structure: Flat Position: Wave (C) Direction Next higher Degrees: wave ((2)) of Motive Wave Cancel invalid level: 1075.57 Details: Wave ((2)) trend move to 61.8% of wave ((1)) at 1483.10 Etheruem/U.S. dollar(ETHUSD)Trading Strategy: Ethereum is Still in a downtrend, with the Price below MA200, and the structure still is a corrective of wave 4th in the Triangle pattern so when wave 4th is complete the price will fall again in wave 5th and may lead to 61.8% of wave ((1)) larger degree at 1483.10 level Etheruem/U.S. dollar(ETHUSD)Technical Indicators: The price is a below the MA200 indicating a downtrend, RSI is a Bearish Momentum TradingLounge Analyst: Kittiampon Somboonsod, CEWA Source : Tradinglounge.com get trial here! Elliott Wave Analysis TradingLounge 4H Chart, 21 September 23, Etheruem/U.S. dollar(ETHUSD) ETHUSD Elliott Wave Technical Analysis Function: Counter Trend Mode: Corrective Structure: Triangle Position: Wave 4 Direction Next higher Degrees: wave (C) of Flat Wave Cancel invalid level: Details: the Movement within a triangle pattern Etheruem/U.S. dollar(ETHUSD)Trading Strategy: Ethereum is Still in a downtrend, with the Price below MA200, and the structure still is a corrective of wave 4th in the Triangle pattern so when wave 4th is complete the price will fall again in wave 5th and may lead to 61.8% of wave ((1)) larger degree at 1483.10 level Etheruem/U.S. dollar(ETHUSD)Technical Indicators: The price is a below the MA200 indicating a downtrend, RSI is a Bearish Momentum. -
Gold and silver prices have been pressured by the Fed rate decision, with both precious metals turning lower towards key rising support. Source: Bloomberg Gold Silver Forex Commodities United States dollar Federal Reserve Daniel Dubrovsky | Currency Analyst, DailyFX, San Francisco | Publication date: Thursday 21 September 2023 05:30 XAU/USD technical analysis Gold and silver prices have turned lower in the aftermath of the Federal Reserve monetary policy announcement. There, Chair Jerome Powell basically alluded to a ‘higher for longer’ approach, causing financial markets to price in a higher terminal Federal Funds rate and pushing back expectations of rate cuts further down the time horizon. In response, Treasury yields and the US dollar rose, working together to pressure precious metals, like gold and silver, lower. On the daily chart below, XAU/USD rejected a recently formed, near-term falling trendline from June. That has opened the door to revisiting rising support from April, which is closely aligned with the 38.2% Fibonacci retracement level of 1903.46. Clearing under the latter would open the door to a stronger bearish technical bias. Otherwise, pushing above near-term falling resistance exposes the 23.6% level of 1971.63. XAU/USD daily chart Source: TradingView XAG/USD technical analysis Meanwhile, silver faces a similar predicament in the wake of the Fed. Higher borrowing costs for longer and a stronger Greenback will likely pressure XAG/USD. On the daily chart, silver can be seen turning back lower towards the rising range of support from August. Broadly speaking, XAG/USD has been consolidating between this rising support and a range of falling resistance from March. As such, the broader technical outlook remains neutral. But, the fundamental consequences of the Fed on silver could open the door to an extended move lower. As such, keep a close eye on rising support. Breaking lower exposes the 78.6% Fibonacci retracement level of 21.24. XAG/USD daily chart Source: TradingView This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
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