FOMC Minutes: Mild hawks reinforce Fed-lift off expectations

Global Markets

Markets received further confidence following the highly anticipated FOMC minutes release that the Federal Reserve will finally begin to raise US interest rates in December. The comment that “it may well become appropriate” to raise US interest rates in December installed confidence among investors, especially considering that this meeting took place before the exceedingly impressive employment report released at the beginning of this month. As a result, the Fed futures jumped back to a 68% probability of the Fed acting. Global currency markets have been in a state of suspension for the most part of Wednesday’s trading session and although appearing uninspiredfollowing the released FOMC minutes, American equities rallied with the Dow Jones gaining +1.1% as investors braced on the swelling expectations of a December hike.

It must be taken into consideration that Wednesday’s FOMC minutes reflect the thoughts of the Fed officials before November’s impressive selection of US economic data. The employment report in particular at the beginning of the month has provided even further support to the idea ofa US interest rate rise in December. With the direction of Gold trading being completely dictated by US interest rate expectations, the increased probability of a US interest rate rise next month has been pivotal behind sending Gold towards a new five-year low at $1065 over the course of November.

Commodity spotlight – WTI

WTI Oil plunged to its lowest level in over two months at $39.92 after US oil stockpiles climbed for the eighth consecutive week. The reoccurring theme of a continuous oversupply of the commodity is incessantly punishing WTI. The recent statement from OPEC that oversupply was at its peak in a decade is going to weigh on investor sentiment and, as a result, restrict any hope of a significant rebound in prices. WTI remains bearish and has breached the $40 support on the daily timeframe; a solid breakdown below $40 may open a path towards $39.

WTI breached the inverted wedge pattern last week and found resistance below the 20 and 50 SMA. The MACD has crossed to the downside and a new lower high may have been created below $42.50. If prices can keep below this potential dynamic resistance, an opportunity may be given to sellers to send price down towards the $39 support.

USDCHF

The USDCHF is technically bullish on the daily timeframe as there are higher highs and higher lows. Prices are trading above the daily 20, 50 and 200 SMA and the MACD has crossed to the upside. The previous resistance at 1.0100 may act as a dynamic support which may invite buyers to send this pair to towards 1.0250.

USDJPY

The USDJPY is technically bullish on the daily timeframe. Prices are trading above the daily 200 SMA and the MACD has crossed to the upside. A breakout above the 123.50 resistance may invite an opportunity for buyers to send prices towards 125.00.

USDZAR

This pair is currently technically bullish on the daily timeframe. Prices are trading above the daily 20 SMA and the MACD has crossed to the upside. Previous resistance at 14.050 may become support which should provide a foundation for buyers to send prices back towards 14.400. A breakdown below 14.0500 may suggest bullish weakness.

SILVER

Silver is heavily bearish on the daily timeframe and has had almost three consecutive weeks of losses. Prices are trading below the daily 20 SMA and the MACD is deep in the downside. A breakdown below 14.05 may send this metal to 13.00.