Investors are watching closely: Will the Fed deliver a hawkish signal, or hint at dovish options?

Frank Walbaum FX Strategies.Asia

Important News for the day

Wed., 18th, 08:00 CET UK Consumer Price Index.
Wed, 18th, 14:30 CET US Unemployment Claims.
Wed, 18th, 20:00 CET US Federal Funds Rate.
Wed, 18th 20:30 CET US FOMC Press Conference.

TikTok US

The social media platform TikTok can still be used in the USA. For the third time, the US government has extended the use of the platform by a further 90 days. US President Trump will sign a decree in the next few days that will allow the Chinese company Bytedance to continue offering its services to US customers. It is alleged that the Chinese government has access to users' data and can therefore spy on American citizens. The US government continues to claim that the platform must be sold to a US company to prevent its use from being banned in the future.

Market talk

The strength of the Dollar seems to continue. Today’s FOMC interest rate decision might offer more momentum for the Greenback if rates are not being cut. The Dollar could gear up steam causing the GBP and AUD in particular to weaken. This might in turn also cause equities to push lower. The Nasdaq index might face negative momentum due to the potentially stronger USD. Furthermore, markets and hence valuations have been rising already quite substantially so far this after the recent correction earlier on. Worth noting that oil prices continue to push higher again and so does the
Silver market. The rising demand could hence also be a sign of fresh strength in the economy in general.

Tendencies in the markets

Equities sideways, USD stronger, Bitcoin sideways, ETH sideways, oil positive, Silver positive, Gold weaker, JPY weak.

Author

Frank Walbaum

FX Strategies.Asia

Frank has been working in the TV business for several years. Acquiring his skills in Germany’s biggest broadcasting station, he then chose to work and live in Asia, which was in 2007.

GBP/USD bounces off lows, back above 1.3200

After bottoming out near 1.3160, GBP/USD manages to regain a bit of shine and reclaim the 1.3200 mark and beyond at the end of the week. Stronger-than-expected UK Retail Sales data seem to be helping the British Pound limit its losses, while the chaotic UK political environment keeps the bulls at bay for now.

EUR/USD looks consolidative around 1.1460

EUR/USD stages a modest rebound after slipping to a three-month low below 1.1420 at the end of the week. That said, the pair now looks to consolidate humble gains just above 1.1460 despite growing uncertainty surrounding the next round of US-Iran negotiations, which keeps the US Dollar’s downside contained.

Gold slips back to six-day lows, targets $4,100

Gold retreats for the third consecutive day on Friday, eroding gains seen in the first half of the week and approaching the key $4,100 mark per troy ounce. Indeed, the precious metal continues to face headwinds from the Fed's hawkish stance and renewed uncertainty surrounding the next round of US-Iran negotiations.

Breaking: Iran closes the Strait of Hormuz amid ceasefire deal violation

Iran says it is closing the Strait of Hormuz after accusing the United States (US) and Israel of violating the ceasefire. According to Iran, the decision came over the continued Israeli strikes in Lebanon. The Iranian Revolutionary Guard Corps Navy issued a warning to all vessels: "Do not approach the Strait of Hormuz; otherwise, your security will be jeopardized."

The Iran war didn't break the US economy, but what happens next?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.