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10/06/21 12:53
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Poll: Do you think USD will weaken in 2023? Could USD lose its grip on the financial markets in 2023? Share any analysis with the Community and comment on the blog below or on this forum why you think USD will weaken or not this year 2023. All the best - MongiIG -
Central bank transparency means few surprises to move markets when the Fed rate decision is announced. Does it still have a surprise to shift the dollar? We look at the potential for upside and downside moves in forex markets. Jeremy Naylor | Writer, London | Publication date: Wednesday 01 February 2023 Fed rate decision It is the US interest rate decision tonight at 7pm UK time. While there’s little move in the currency markets so far this morning ahead of the announcement, it is an event that could well move the markets when we see that detail coming through from the Federal Reserve (Fed) and also at the press conference a little bit later on. The expectation Let's take a look at the detail as we're expecting it to break this evening. It's expected to raise interest rates by a margin of 25 basis points, a quarter of one percentage point, to a range of between four and a half and four and three quarter percent. But the big question is how long will the Fed remain on this tightening path? Now, this 25 basis points expected follows a 50 basis point increase in December and four successive 75 basis point interest rate rises previously. Dollar basket Let's look at what's happening with the dollar basket. As I said, not much move at the moment at 10173. Now this direction of travel here showing the dollar weakening away from the highs that we saw back in September last year when the Fed was in that aggressive tightening cycle. Since then, we have seen lots of evidence to suggest that the Fed is wanting to take its foot off the pedal a little bit - 25 basis points is already priced into these markets as things stand there at the moment. There's a little bit of an uptick in the momentum, indicating that there is an appetite, I think, to take this market higher. But if the Fed comes through with anything like the sort of dovish reports in the press conference that some are expecting, we could well see some of that unwound. EUR/USD - trading the move So how do you trade this? Well, let's take a look at the opportunities here. Let's assume that the Fed is going to be dovish, maybe more so than had been the case previously. The euro/dollar trade would go higher and at 10873, you'd put your stop below this area down here at around about the 10750 level, 10873. The area to beat is this 10936, which is the highs that we saw back on the 21st of April last year. Now that's long euro/dollar. Assuming we get a dovish Fed, if the Fed looks like it wants to keep its foot on the pedal, if it wants to continue to try and combat inflation, which is certainly the mantra that we're getting and we have in the past, that's what central banks are meant to be doing. In that case, you would go short on this, and I think there's more money going into the dollar. If we see something more hawkish from the Fed, in which case you go short on this with a stop above this area up here to round about the 10970 level, with a view to taking this lower depending on what the outcome is of that interest rate decision. GBP/USD And the Fed statement tonight, I just want to show you what's happening in sterling against the US dollar, this is sterling having risen up to a level at 12446 with the highs we saw recently back on the 18th of January. Since then, there's been a little bit of consolidation going on, same sort of thing. If you're looking at a dovish Fed, you'd be taking this up. In other words, you'd be long with a stop below recent price action. If you think that there's going to be an aggressive Fed, then obviously you would expect this market to move lower on the session around that decision tonight from the Federal Reserve.
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Gold jittery ahead of FOMC, as Brent crude and natural gas look at risk of further downside Gold starts to show signs of jitters ahead of the FOMC, as natural gas and Brent crude look set for potential weakness ahead. Source: Bloomberg Joshua Mahony | Senior Market Analyst, London | Publication date: Wednesday 01 February 2023 Gold jitters evident ahead of FOMC Gold has seen a pick up in volatility this week, with the precious metal managing to spike higher after a decline that took price back down towards the $1896 support zone yesterday. The wider trend remains undeniably bullish, with the trend of higher lows providing a framework that brings expectations of further gains. Nonetheless, with the FOMC bringing greater uncertainty for the dollar, it is worthwhile expecting to see volatility today. From a technical perspective, a break back down through the $1896 level would be required to bring an end to this intraday uptrend. Until then, further upside looks likely. Source: ProRealTime Brent crude showing signs of weakness from trendline resistance Brent crude has started to show signs of weakness after a period of strength that brought price back up into a wider descending trendline last week. The wider trend therefore threatens to kick-in once again from this region. Crucially, we have subsequently seen price turn lower to break the $84.02 swing-low. With that in mind, there is a good chance that the current move higher could be a retracement before crude heads lower. Keep an eye out for the Fibonacci resistance zone up ahead as a potential area where the bears come back into play ($86.77-87.63). A move up through the $89.01 level would be required to bring an end to this current bearish outlook. Source: ProRealTime Natural gas downtrend continues despite attempt to regain ground Natural gas has been hit hard over the course of the past two months, with price losing 60% over the course of December and January. That clear downtrend brings expectations of another leg lower despite the gains we save seen yesterday. The ability to maintain the pattern of lower highs does bring a need to reverse lower before the $2.907 mark. With that in mind, further downside looks likely from here, with a push up through that recent swing-high required to signal a more protracted period of upside. Source: ProRealTime
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Question
myke
Hello There, I have not been able to acces IG from Indonesia for 2 days. Why is that? I am Australian resident and taxpayer caught overseas and I have tried multiple platroms, browsers and PCs. all cannot reach IG.com. The only way to access is a roundabout way thruogh pc at my brothers in Oz. Please fix quickly or I'm moving. regards Myke
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