Inflation continues to worry FED

12 October, 2017

FOMC minutes were released today and painted some interesting pictures on the state of the US economy. So far FED members are calling for interest rate rises in the economy and one before the year ends, and the market is betting on this. At the same time there is a further talk of three rate rises in 2018 which seems like business as usual. However, when you look at the most recent FED meeting minutes there is a lot of worry about inflation, which has been one of the defining features over the last decade. A large amount of QE has lead to weak inflation and this continues to be a problem in developed economy, unless you're seeing large drops in your currency (Japan, UK for example). So with the FED looking a little timid over inflation maintaining in the long run, it could be the case that we don't see the rate rises that we expect and certain markets are betting that may be the case.

No more so than equity markets which despite all the bearish talk have continued to be bullish. Early on many talked about rate rises have a large impact on equity markets, but with the pace of rate rises we are seeing and the concern for the future it's likely it may take some time for the wind to be taken out of equity markets sails. With the S&P 500 continuing to rise resistance levels are becoming somewhat of a novelty with brief pauses, before large extensions higher. So far the market is looking for psychological level as it breaks into new highs and the next level of resistance is likely to be found at 2575. If the market were to dive then I would expect pressure to occur on support at 2551 and 2524, with any further drops likely to stop at 2500 as the line in the sand level. Even if the bears swipe past this then the 100 day moving average continues to be strong dynamic support for bulls in the market.

European markets have been buoyed by the recent Spanish tough talk and the backing down of Catalan. Nevertheless, Spain is still seeking conformation about the Catalan position and it's likely it could lead to more unrest if Spain looks to use force and imprisonment. For the EUR traders the more Spain gets past this the quicker the bulls can look to regain control, and thus far that has been exactly the move for them.

EURUSD traders have extended further and closed above and held support at 1.1814. The bulls are now targeting 1.1915 and 1.2000 at present. Market expectations are high, but any internal turmoil in Spain could derail the Euro-zone and put pressure back on the Euro. A weaker USD is also helping, but if it did strengthen we might find pressure on support at 1.1719 and 1.1621 with the potential to go lower on USD strength. 


Source  
Gold remains an attractive investment option23 Jun, 2020  

After declining 5.4% from the peak reached on May 18, gold is again flirting with the key resistance level and recent multi-year high of $1,764. The resurgence...

Apple chips to overcome Intel silicon valley23 Jun, 2020  

After years of rumours, it's now official: Apple is breaking up with Intel. At its Worldwide Developers Conference 2020, which kicked off on Monday, Apple...

Week ahead offers healthy dose of reality22 Jun, 2020  

Global investors are set to be given a healthy dose of reality this week, which could help them firm up their outlooks for the global economy. Until there is.


US consumers join the party17 Jun, 2020  

The hotly anticipated US retail sales figures were released earlier this afternoon and they didn't disappoint with more records broken. The headline number topped...

Gold Market Daily: Bears calling the shots9 Jun, 2020  

Gold on the D1 time-frame was in an extended uptrend until May 18 when a higher top was recorded at 1765.08. Supply pressure increased...

Crude Oil Daily: Bullish Activity on the rise11 May, 2020  

The price of Crude Oil, on the D1 time-frame, was in a lengthy downward spiral until April 21 when a lower bottom was recorded at 9.87. This extreme all-time low...


Is lightening set to strike twice for U.S. oil price?28 Apr, 2020  

Investors keeping their fingers crossed as hope builds following gradual steps from world governments to slowly loosen lockdown restrictions will eventually...

Darker mood awaits oil markets after WTI Crude collapse21 Apr, 2020  

WTI Crude has depreciated 7% today and more than 80% since the start of 2020. Prices are heavily bearish on the daily timeframe with the technical and fundamentals...

A raft of disappointing economic data16 Apr, 2020  

After climbing to a one month high on Tuesday, the S&P 500 declined 2.2% yesterday and more losses are set to follow today with futures indicating a lower open...