Stocks rise again, WTO rules against US tariffs, Oil rises, Gold softens


The Nasdaq continues to lead the stock market rally as investors brace for another Fed meeting that could deliver a dovish surprise. Following Jackson Hole, the Fed’s new framework allows them to take a pass at this meeting, but not all investors are betting on that.  The Fed will likely reiterate the need for Congress to do more and moderate their forecasts which have already seen inflation and the labor market rebound run hotter than what was forecasted in June.  The Fed will be unable to be optimistic about the recovery until they see how the economy performs when the second wave of the coronavirus hits.  The labor market has improved better-than-expected but most of the momentum has faded.  Powell will likely remain downbeat and that might be enough to keep risky assets supported.        

While the mega-cap tech stocks are stealing most of today’s headlines, real estate and utilities are leading the charge higher.  The rotation into cyclicals is very positive long-term for stocks and this rally is starting to see significant gains in real estate, materials and consumer stocks

Oil

Crude prices whipped around on mixed global economic data, another downbeat oil market report, and as a handful of tropical storms appear poised to lead to further disruption of refinery operations and gasoline distribution.  The crude demand outlook is mixed with China’s economic recovery accelerating, while the US is clearly showing signs that momentum has stalled. 

WTI crude is likely to continue consolidating ahead of both the Fed policy decision and OPEC’s joint ministerial monitoring committee meeting on Thursday.  It is hard to get excited about higher oil prices as the demand outlook remains shaky due to winter virus wave fears and as the OPEC+ alliance seems to be falling apart as cheaters secure more market share. 

Gold

Gold prices turned negative after the WTO said the US violated international trade rules with China.  Gold wasn’t going to break above the $2000 level before the Fed so investors used the WTO headlines as an excuse to head for the sidelines.  While the Trump administration can effectively veto the WTO decision by filing an appeal over the next two months, the ruling will likely restrict ‘tariff man’ from relentless protectionism. 

Gold trading will likely remain choppy until after the Fed policy decision, which should justify rates will remain near zero for the foreseeable future.  The Fed is not likely ready to enhance forward guidance, but if they do that could spell trouble for the dollar and send gold soaring.  If the Fed tweaks their asset purchase program, that could be all that is needed to send gold higher.  

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

AUD/USD: Corrective advance intact while above 0.7065

AUD/USD stalls its corrective bounce just shy of the 0.71 barrier, as the bulls take a breather before the next push higher. The spot is holding above the critical support at 0.7065 amid the upbeat market mood-driven reduced haven demand for the US dollar. 

AUD/USD News

USD/JPY finally about to make the U-turn to 103s?

USD/JPY is under pressure as the US dollar is broadly sold off across the board. DXY has been telegraphing a downside correction for a number of days. Meanwhile, there has been a couple of domestic releases for the yen with the Bank of Japan Summary of Opinions.

USD/JPY News

Gold looks north, two key levels to watch out

Gold started out the US NFP week on a solid footing, rallying nearly $20 on Monday. The metal bounced-off the SMA100 one-day support for the third straight day, courtesy of the broad retreat in the USD from two-month peaks.

Gold News

US CB Consumer Confidence Preview:  Neither happy nor sad

American consumer attitudes have recovered from their April pandemic low but they remain stalled far below their levels of last year. The Conference Board (CB) Consumer Confidence Index is predicted to rise to 89.2 in September.

Read more

WTI slips below $40.50 amid US dollar recovery, API data eyed

WTI refreshed the intraday low after reversing from $40.79. US dollar regains upside momentum amid hopes of further stimulus. Challenges to the US-China trade deal add downside pressure on oil prices. API data, USD moves become the key amid a light calendar.

Oil News

Forex Majors

Cryptocurrencies

Signatures