Fed’s meeting minutes in the epicenter of attention

Fed’s meeting minutes to shake the markets

The USD edged higher, possibly supported on a fundamental level by some safe haven inflows, and the anticipation of the market for the release of the Fed’s last meeting minutes. The document is expected to be scrutinised by market participants and analysts and a possibly hawkish tone could enhance market expectations for the Fed to keep its monetary policy tight and thus provide some support for the USD while in such a scenario, US stock markets and gold’s price may lose ground. On the flip side, should there be Fed policymakers sounding dovish we may see the USD being in the reds and US equities and gold gaining.  

Oil prices gain on Hormuz tensions

Oil prices gained as the US revoked a waiver for Iran to export oil and launched military strikes against Iran. The escalation of tensions renewed worries for the outlook of the US-Iran negotiations. We view the incident as a display of power from the US side, given the restart of the negotiations early next week. Yet should tensions escalate further, we may see oil prices getting further support, while an easing of the market’s worries for the situation at the Straits of Hormuz could weigh on oil prices.

US stock markets edge lower

US stock markets weakened yesterday and characteristically, Dow Jones, S&P 500 and Nasdaq all ended their day in the reds. On a fundamental level, the market’s worries for possible overvaluations in the Tech sector seems to be dragging share prices lower in the sector, yet also some expectations that the Fed’s meeting minutes may sound hawkish, may have weighed as well.

Gold’s price loses ground as the USD gains in the FX market

Gold’s price edged lower yesterday as the strengthening of the USD, tended to weigh somewhat on the precious metal’s price, given that the negative correlation of the two trading instruments is still active. Despite tensions in the Middle East viewed as a possible driver for safe-haven inflows for gold, we still consider the USD as the market’s preferred instrument for such purposes. 

Other highlights for today

Today we get Sweden’s CPI rates for June and GDP rates for May and the US EIA crude oil inventories figure, while ECB’s Pereira speaks. In tomorrow’s Asian session we get New Zealand’s manufacturing PMI figure and China’s inflation metrics, both for June.

Charts to keep an eye out

USD/JPY continued to rise aiming for the 162.80 (R1) resistance line. We note the bullish tendencies of the pair, as the RSI indicator is above 50, yet for the time being we maintain a bias for a sideways motion. Please note that the higher the pair goes the more possible a market intervention operation is, by the Japanese Government to JPY’s rescue. For a bullish outlook to emerge we would require the pair to break the 162.80 (R1) marking a 40-year high and start aiming for the 165.50 (R2) resistance level. Should the bears take over, we may see USD/JPY breaking the 160.50 (S1) line and start aiming for the 157.50 (S2) support level.

WTI’s moved higher breaking the 71.85 (S1) resistance line, now turned to support. The RSI indicator has risen signaling an easing of the bearish market sentiment for the commodity’s price, and the Bollinger bands are narrowing implying an easing of volatility. We tend to expect some stabilisation WTI’s price at the current stage. Should the bears regain control over WTI’s price we may see it breaking the 71.85 (S1) support line and continue to break also the 67.05 (S2) support level. Should the bulls take over we may see WTI’s price nearing if not breaking the 76.60 (R1) resistance line with the next possible target for the bulls being the 82.00 (R2) resistance level.

Calendar follows

USD/JPY daily chart

• Support: 160.50 (S1), 157.50 (S2), 155.00 (S3).
• Resistance: 162.80 (R1), 165.50 (R2), 171.60 (R3).

WTI daily chart

• Support: 71.85 (S1), 67.05 (S2), 60.90 (S3).
• Resistance: 76.60 (R1), 82.00 (R2), 88.60 (R3).