Gold’s time to shine

The week ahead is dominated by the Fed interest date decision & press conference.

The highly anticipated rate cut is looming, but traders will focus heavily on the tone and language from the Fed during the Jerome Powell press conference – pivotal for the USD & Gold.

Gold has traded on both sides of the $1,500 level in the past few trading days as the Oil attack rocked the risk sentiment, but that rally to $1,511 was very short-lived.

My point is, from here the USD could rally mildly on Thursday as the Fed likely cuts by the amount which is already priced in (0.25%) so a USD rally means Gold dips lower.

Watch out for the following three things in the upcoming trading session:

1.Gold’s time to shine

2. AUD after the RBA minutes

3.What to watch in FX

 

Gold’s time to shine

The Gold price is certainly demonstrating signs of weakness as it again punches under the $1,500 marker.

When we see price action holding around $1,498 that does indicate some uncertainty ahead of the Fed meeting in terms of Gold positioning, from the larger end of trading town anyway.

I can see the USD sellers being disappointed this week and therefore the Gold buyers may be left wondering what happened also.

I expect a move lower in Gold, towards $1,473/$1,475 levels based on the US Fed rate decision being well priced in to current USD & Gold prices.

 

AUD after the RBA minutes

TheRBA minutes released today highlighted the risks around Australia’s stalling wage growth and indicated that risks for Australia’s economy are still tilted to the downside.

What can we read into today’s minutes from the last RBA meeting?

Expect that the RBA are ready to cut AUD rates further from 1% in the coming months where appropriate – likely an October rate cut in my view of 0.25% as a measure against the risks faced by Australia’s economy.

The trade headwinds remain a headache for the RBA and AUDUSD levels around 0.6850 are back on the charts, with AUDJPY at 74.15 unchanged from overnight dealing in the aftermath of the risk off start to this trading week.

Aussie jobs data is released on Thursday in the Asian dealing session so expect a volatile end to the week for AUD against FX counterparts.

 

What to watch in FX

The week ahead is enormous for global markets with most attention squarely focused on the USD outlook & sentiment around the Fed’s next path in US interest rates.

I have no doubts that we will not see an aggressive 0.5% cut, but in stead the 0.25% cut that markets have baked into FX majors.

So, which are the best pairs to watch? USDJPY remains bullish above the 108 handle even if only slightly regaining that price point.

I can a move towards 108.80 this week for USDJPY.

EURUSD did a sharp reset from 1.1060 to 1.1000 flat overnight and move pain on the downside is very possible in EURUSD – to 1.0930/1.0950 area.

As for GBPUSD the risks are getting higher for a pullback on Brexit uncertainty, so I am selling GBPUSD again. I expect USD to be bid higher this week, plus with the Bank of England being on hold that also adds weight to my Sell GBPUSD ideas from 1.2415 to 1.2350.