Photo - Andreas Zanin
Andreas Zanin
Analysis, Market Analysis | September 19, 2023

JASPER’S MARKET SQUAWK 19-09-2023

Investors Cautious Ahead of FOMC

Markets remained cautious ahead of a barrage of central bank decisions during light trading on Monday despite the simultaneous Detroit strike continuing to take its toll. Meanwhile, the prospect of a government shutdown by the end of the month looms nearer. Gold and WTI continued to ascend.

Chart: XWTI

Key Factors for Today

  • Investors Brace for Central Bank Decisions as Fed Decision Looms
  • UAW Strike Continues Amidst Investor Caution Ahead of FOMC
  • Gold Extends Winning Streak as China Lifts Import Ban
  • WTI Surges to Fresh November High, Triple Digit Potential
  • RBA Minutes Reveal Cautious Approach to Rate Hikes

Market Focuses a Little Away from UAW Strike Ahead of FOMC

The UAW strike against the Big Three Detroit automakers continued, highlighting the unrest in the labour market as the FOMC prepares to wrap up its 2-day meeting where investors widely expect the Fed to keep rates unchanged. The 10-year dropped slightly, dragging the US index down to 105, which allowed the EUR/USD to accelerate over 0.30%, shy of $1.070. The next resistance is expected near $1.0730, with support at $1.066.

Gold Records 3-Day Streak as China Lifts Import Ban

China’s central bank lifted short-term curbs imposed on gold imports in August to defend against a weakening renminbi, helping the precious metal secure a 3-day winning streak. The spread between Shanghai and London gold prices had hit a record high last Thursday but has contracted somewhat after the lift. Gold may have been slightly impacted by the latest rhetoric of a gov shutdown, along with the dollar’s drop on Monday, taking over $1930/oz and opening up $1940/oz next. Support can be seen near $1920 an ounce, with a red day ending the gold’s short-term ‘rush’.

WTI Hits Fresh November High, Eyes Tripple Digits

Oil continued to rise in full force on Monday, recording a fresh November high past $92 a barrel as markets appear to still price in expected supply shortages. Extending its 5-day streak past $93.80/bbl may make triple digits possible unless bulls lose the $90 handle. Nigerian Qua Iboe and Malaysian crude trade over $100 a barrel.

Minutes Show RBA Backed Down on Hiking Rates

Minutes of the RBA overnight showed that the bank had considered raising rates but decided to keep them unchanged due to risks associated with tightening. The RBA was concerned about a possible economic slowdown, weaker domestic consumption, and contagion from China. However, it noted that further tightening may still be needed if inflation persists. AUD/USD barely moved following the minutes’ release after closing relatively up on Monday. 0.6440 is short-term breakout resistance, with support above 0.6408 settled by 0.6429.

On The Docket

  • EA CPI Inflation
  • CA CPI Inflation
  • ECB Elderson Speech
  • Building Permits, Housing Starts
  • NZ Dairy Trade Price Index
  • BOC Kozicki Speech
  • API Crude Oil Stock Change
  • Japan’s Trade Balance

FX 1-Day Relative Performance (USD)

  • Aussie 0.02% up only, Kiwi at +0.09%
  • Euro 0.10% lower, Pound down 0.03%
  • Yen is down by 0.11%, Franc by -0.03%
  • Canadian dollar up by 0.05%
  • Gold 0.04% down, Silver0.18% in red
  • Crude and Brent 0.77% and 0.65% higher
  • Natural gas is a tad lower, with 0.04% loss
Latest Article
Improve your trading with a True ECN Broker
Trading account overview