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EUR/USD and Gold Prices Hinge on Fed Meeting

EUR/USD and Gold Prices Hinge on Fed Meeting

Markets steadies in anticipation of the US Fed meeting on Wednesday.

The Japanese’s trade balance numbers of ¥248.3B released earlier for August came in higher than expected of -¥37.5B, and better than the prior read of ¥10.9B. Nevertheless, this data did have any noticeable effect on the Japanese yen against major currencies.

Equities

Global stock markets closed higher on Tuesday thanks to positive Chinese data. However, Asian markets on Wednesday looked more cautious anticipating the Fed meeting on Wednesday.

Investors are taking into account market risks such as the US elections, a potential no-deal Brexit, and the delay of the Coronavirus vaccine, even though the president Trump said that the jab may be ready within few weeks.

Stock Market

Change %

S&P 500

+0.5 %

Dow Jones

-0.01%

NASDQ

+1.2%

Japan 225

-0.08%

DAX 30

-0.1%

FTSI 100

+0.8%

CAC 40

+0.2%

Currencies

The US Dollar index remained flat as investors wait for the Fed meeting on Wednesday. No change in the current monetary policy is expected, yet the market’s observers would be following the central bank’s growth and inflation projections, and of course the unemployment rates. Additionally, they will pay attention to the Fed dot plot diagram and whether the Fed members’ have changed expectations for the US interest rates in the coming years.

EUR/USD saw little change keeping and remained in the current trading zone 1.1713 – 1.1909. The technical outlook remains neutral while the pair continues below 1.1909.

GBP/USD steadied this week after losing over 3% of its value last week due to Johnson’s controversial internal market bill that breaches in part of it the UK commitments in the EU/UK exit treaty. With that said, we still think that both would agree eventually, due to the expensive bill they must pay in the hard Brexit scenario. From a technical point of view, a close below 1.2773 would change Cable’s technical outlook to negative.

Commodities

The oil price has traded higher for the second day due to a disruption in the US oil supply caused by hurricane Sally. The US Crude rose by 3.2% and Brent oil rallied by 2.5% on Tuesday, both markets extended their gains on Wednesday due to reports that the outage may continue for several days.

Gold rallied to a near two-week high on Tuesday then pulled back as investors preferred to wait for the Fed meeting before pushing the yellow metal in a clear direction. From a technical point of view, Gold’s outlook remains neutral while moving in the current trading zone $1,921 - $2,015.

Looking Ahead

On Wednesday, investors will know about the Eurozone balance of trade for July at 1:00 PM (UAE time), the Canadian inflation rate with the US retails sales for August come at 4:30 PM, and at 10:00 PM all eyes will be on the Fed rate decision and economic projections than the Fed chair press conference at 10:30 PM.

The Fed Dot Plot Diagram June 10-2020


Diagram source: The Federal Reserve Projection Materials

المعلومات / البحث الذي أعده محمود القدسي رويز لا يأخذ في الاعتبار أي أهداف استثمارية محددة أو وضع مالي أو احتياجات خاصة لأي شخص معين. ويُقِر محلل الأبحاث المسئول بشكل رئيسي عن محتوى هذا التقرير البحثي، جزئياً أو كلياً، أن وجهات النظر حول الشركات وأوراقها المالية الواردة في هذا التقرير تعكس بدقة وجهات نظره الشخصية فحسب، وبالتالي فإن أي شخص يتصرف بناءً عليها يفعل ذلك على مسئوليته الخاصة بشكل كامل.

لا يمثل البحث المقدم هنا آراء JME Financial Services (Pty)Ltd كما لا يعتبر دعوة للاستثمار مع JME Financial Services (Pty)Ltd. يُقِر محلل الأبحاث أيضاً أن جزء من التعويض الذي يحصل عليه، أو سيحصل عليه، بشكل مباشر أو غير مباشر، يرتبط بالتوصيات أو الآراء الواردة في هذا التقرير.

اعتباراً من تاريخ نشر التقرير، لا يمتلك محلل الأبحاث وزوجته/زوجها و/أو أقاربه الذين يعتمدون عليه في أمورهم المالية، حصصاً في الأوراق المالية الموصى بها في هذا التقرير (تشمل ""الحصص"" الملكية المباشرة أو غير المباشرة للأوراق المالية).

لا يعمل محلل الأبحاث لدى JME Financial Services (Pty)Ltd. ننصحك بطلب الحصول على استشارة من مستشار مالي مستقل بخصوص مدى ملائمة الاستثمار، بموجب ترتيبات منفصلة، والتأكد من ملائمته وتوافقه مع أهدافك الاستثمارية المحددة، وضعك المالي أو احتياجات المالية الخاصة قبل الالتزام بالاستثمار.

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