Narrow ranges have been prevailing across asset classes yesterday and there wasn’t too much of a reaction to the Fed announcement yesterday. Fed provided some buying impetus and both stocks and bonds closed with modest gains in tandem with Treasuries and Wall Street. Overnight, the Treasury yields have lifted 0.3 bp to 1.24% as Chinese shares led a broad rebound in Asian stock markets.

  • Like the ECB, the Fed signalled progress on the recovery, but also effectively signalling a cautious wait and see stance over the summer. FOMC signalled patience on tapering.

  • Chinese officials stepped up efforts to reassure investors, with state-run media questioning whether the correction in equities was overdone and reports suggesting China will continue to allow local firms to go public in the US.

  • China’s central bank boosted cash injections by adding 30 billion yuan.

  • Australian import and export prices came in higher than anticipated, which left local bonds paring earlier gains.

  • Topix and JPN225 are currently up 0.2% and 0.6%, t.

  • GER30 and UK100 futures are down -0.1% though and US futures are narrowly mixed, as investors wait for US GDP data.

  • Weekly US inventory data showed a 4.1 mln barrel draw on stockpiles, more than the median forecast for a 3.43 mln draw.

  • A Reuters report highlights analysts expecting a quicker-than-is-being-anticipated plateauing in summer oil demand across the northern hemisphere due to the impact of new restrictions in the face of the Delta variant driven a spike in new Covid cases.

  • Proposed US infrastructure deal looks to higher taxes on crypto for part of the funding.

  • Pfizer Inc. in Q2 2021 jumped 92% on the year to $19 billion, exceeding analyst expectations.

  • Nissan Motor and some semiconductor firms  (Advantest, Screen Holdings, TDK ) delivered suprisingly strong earnings.

In FX markets: Both the EUR and the pound have moved higher against a largely weaker USD, with EURUSD now at 1.1863 and Cable at 1.3936. USDJPY dropped back to 109.66. The USOIL meanwhile is trading at $72.20 per barrel. Gold prices spiked to 1819 as the US Federal Reserve chairman struck a dovish tone after a policy meeting.

Today: The European calendar is busy today with German HICP inflation and labour market data alongside the Eurozone ESI economic confidence reading out today. Markets will also wait for US GDP data.

XAUUSD

Biggest FX Mover @ (06:30 GMT) XAUUSD (+0.72%) – Spiked to 1819.81 breaking 20-, 50- and 200-day EMA. Currently, the fast MAs are still aligned higher as, MACD signal line & histogram pointing northwards and RSI extended to 71.60 suggesting that positive bias increases.

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

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