The Federal Reserve left the market uncertain about its next approach. The FOMC Meeting Minutes showed a notable split between the members.
Some members continued to show their concerns about low inflation and the reasons behind the recent slowing down, while other members are still arguing that low inflation is a transitory period, despite the fact that inflation has been declining since the beginning of the year, according to their most respected inflation index (Core PCE Price Index).
Moreover, some members also argued that it would be better to raise rates one more time this year even if inflation is still lower.
USD Nearing Support Area
Following the FOMC Meeting Minutes release, the US Dollar index traded within a tight range for few minutes, before it slides back across the board, declining all the way to as low as 92.96 and closed yesterday’s trading below 93.0 support area.
In Asia, the index continued its decline all the way to 92.80, which represents its short term trend line support on the daily chart, and bounced off, nearing the 93.0 resistance area.
In the meantime, the short term outlook remains bullish as long as the Index continues to trade above both trend lines shown on the char, which stands between 92.80’s and 92.50’s which should be watched very carefully, as a breakthrough that support, would clear the way for further declines, probably toward 92.20’s.
Key Fundamentals Ahead
During the US session ahead, there are many economic figures will be released, which likely to have a notable impact on the market, whatever the outcome is.
We will be watching the PPI, Core PPI and the weekly initial jobless claims, but of course, PPI data will be the key.
Estimates are positive, PPI is set to rise by 0.4%, which would be the second monthly increase in a row and the biggest monthly increase since April, while the Core PPI is set to rise by 0.2%
Despite today’s data, traders may need to keep an eye on tomorrow’s inflation data, which matters the most.
The CPI is expected to post the biggest monthly increase since 2013, rising by 0.6%, while the Core CPI is expected to rise by 0.2% for the second month in arrow.
These positive estimates comes on the back of the recent rise in Average Wages growth, any disappointment from tomorrow’s data would indicate that the wages growth is likely to be revised lower once again. In return, the US Dollar will be the victim once again.
Careful To Buy Gold
Gold prices managed to recover some of its last week’s loses, after it retraced by 61.8% Fibo from the latest rally.
As shown on the chart, Gold managed to bounce right from its 61.8%, rising for the fifth day in a row. However, Gold is now trading between a solid resistance area, which held since the beginning of the year, between 1290 and 1300.
AI wouldn’t start buying gold after five days of consecutive gains and when its at a solid resistance area. I would wait to see the reaction at the current levels and/or to wait for a breakout followed by a downside retracement before joining the bulls once again
Careful to buy Gold at this week’s high.
Edited by:
Nour Eldeen Al-Hammoury
Market Analyst
