Overnight’s Fed announcement is in line with the market expectations. As expected, Fed kept monetary policy settings unchanged. G10 currencies were a little higher against the dollar, but market reaction was minimal to the Fed’s policy update.
The 10-year yields remained at 1.63%, whereas Gold added $5 into closing. In the Asia session on Thursday, Gold quickly added another $7 to $1779 but remained capped at 100MA. At the same time, majors hold firm against the dollar.
The Latest Fed monetary policy showed an upbeat tone on the economy. But all the eyes on the communication around inflation.
Finally, we have got this, “Inflation has risen, largely reflecting transitory factors.” And the Fed also said, “The ongoing public health crisis continues to weigh on the economy, and risks to the economic outlook remain.”
Market reaction:
Equity market: Equity benchmark indices in Asia rose a little after Fed confirmed it is too early to consider tampering. In comparison, U.S. indices closed in red overnight.
The U.S. dollar faced stiff resistance before the Fed meeting and continues to slide, whereas EUR holds that same moving average and marching above 1.21 levels.
Gold trading below 100MA and facing stiff resistance in the precious metal space, whereas Silver trading above the same.
A decisive breakout above $26.60 would trigger a forward thrust towards $27 and $27.50 levels. Compare to Gold; Silver is well-positioned to edge higher. A weekly close above $27 allows the price to stretch its wings towards $28 and $28.70 levels.
Supports:
Gold: $1758, $1745 and $1723
Silver: $25.50, $25 and $24.60
Looking ahead, we will get 1st estimate of U.S GDP. Consensus is looking at 6.6% q/q. If the 1st estimate hits the wires above consensus, overnight moves are likely to fully reverse. In this case, USDJPY will be watched closely.
Chart of the day:
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