European update – Trade, Jackson Hole, gold, oil

European update - Trade, Jackson Hole, gold, oil - MarketPulseMarketPulse

image

Home/Central Bank Watch/Commodities/Currency/FX/Indices/Market Pulse/USD

Share 0

Markets steady as focus shifts to Wyoming

Markets remain in wait-and-see mode on Thursday, after the Fed minutes told us nothing we didn’t already know despite briefly being responsible for the, now very well known, recession indicator flashing red for a second time.

 

Source – Thomson Reuters Eikon

The minutes on Wednesday highlighted just how difficult the current situation is, with the central bank deeply divided on the correct course of action, although there was a broad agreement that the July rate cut was a “mid-cycle adjustment” rather than the start of an easing cycle. Of course, one doesn’t stop the other becoming true and could develop that way.

The two key takeaway from the minutes as far as I’m concerned is that they are very outdated already – as we already thought – and investors are in no mood to tolerate the Fed dragging its feet. Which begs the question, how will Powell respond in his speech on Friday? Investors are effectively trying to force the Fed into submission and the central bank is losing, if they’re going to fight back, now is the time. But it could get messy.

Investors refuse to accept that more rate cuts aren’t coming and have priced in at least two more this year, with one at each remaining meeting being a coin toss. If Powell disappoints on Friday, I will be shocked if the recession indicator doesn’t flash red again, a punishment from the markets for the Fed not doing as its told. So does Powell concede defeat, or accept responsibility for recession fears mount, even if the cause of it don’t lie with him?

Sign up for our next webinar on 27 August below

Gold waiting patiently

Gold has been waiting patiently for the Jackson Hole event all week, hovering around $1,500 to see whether bulls can muster up the energy for one more charge higher. That depends on Powell and whether he’s willing to accept defeat and signal more easing, which could soften the dollar and reinvigorate the gold rally.

Further stubbornness from the Fed Chairman – and the rest of the committee, it should be said – could strengthen the dollar and pull on gold prices, possibly inducing further profit taking and putting $1,480 under severe pressure. A break of this may suggest we’re in correction territory.

Gold Daily Chart

OANDA fxTrade Advanced Charting Platform

Oil looks prepared for a nasty drop

Oil looks in limbo at the moment. It’s been steadily rising over the last couple of weeks but not in any convincing way, which suggests traders are waiting around for the next sell-off. Brent has now steadied itself around the $61-62 area and looks reluctant to go much further without good reason and that’s unlikely to come from trade war news.

A risk rally at the end of the week may get it moving again but that hangs on Powell, really. This looks like a market which is waiting for bad news, at which point it could plunge lower once again. Of course, that may not come but as long as it hangs around these levels, it looks vulnerable to a nasty drop.

Brent Daily Chart

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

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 that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.

Craig Erlam

Latest posts by Craig Erlam (see all)

Original author: Craig Erlam
ZEW-Gutachten: Innovationsindikatoren Chemie 2019
IHS Markit European GDP Nowcasts
 

Comments

No comments made yet. Be the first to submit a comment
Already Registered? Login Here
Guest
Tuesday, 24 September 2019
 
     
 

Latest Spot Rate

 
Wait a minute, while we are rendering the calendar
How It Works | About | Contact | Privacy Policy | Forex Marketing
© 2009 - 2019 Forex Forum. All Rights Reserved. Risk Disclaimer: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.