Originally published by AxiTrader
Markets Overview:
- Equities: Nikkei (-0.43 %), Hang Seng (-1.00 %), CSI 300 (-0.30 %), KOSPI (-0.69 %), ASX 200 (-1.21 %)
- Commodities: WTI Crude $44.71 (-0.04 %), Brent Crude $47.05 (+0.11 %), Natural Gas $2.95 (+0.41 %), Gold $1264.34 (+0.28 %), Copper $257.60 (+0.10 %)
What traders are talking about:
The outcome of the June FOMC was pretty much in line with the expectations of the market, although it cannot be called a dovish hike. The central bank sees the slowdown in inflation as transitory factor and is comfortable with its current course. The next rate hike is likely to arrive in December, and the balance sheet runoff should begin prior to that.
The Greenback recovered after the Fed meeting. Prior to that, it came under pressure following weak CPI and retail sales data. Those figures still weighed somewhat on sentiment, even after the FOMC.
Stock markets came under pressure. The US indices finished the trading day with a loss, and the major APAC indices are lower as well. The Nikkei fell around 0.40 percent, while Australia's ASX 200 lost more than one percent on the day.
News that US President Trump is under investigation for possible obstruction of justice weighed on sentiment as well. Investors have little hope that Trump will be able to execute his economic plan anytime soon.
Gold came under pressure post-FOMC. The precious metal tumbled from $1280 to a low of $1257. In Asia, it bounced and recovered to $1265. Should politics continue to weigh on markets, Gold could catch a bid again. The charts suggest $1250 is the level to watch. A clear break beneath that support level would pave the way for a move towards $1220.
In FX, volatility remained surprisingly low for a Fed meeting that traders were looking forward to for a while. EUR/USD and GBP/USD are almost unchanged from yesterday’s EU open. In Asia, the focus was on the Aussie and kiwi dollar. The Aussie Dollar rose following better than expected AUS employment data. Employment change arrived at 42k vs. 10k expected, while the unemployment rate declined to 5.5 % (from 5.7 % previously). The participation rate increased from 64.8 % to 64.9 %.
From a technical perspective, the outlook for the Aussie Dollar has turned positive. AUD/USD has cleared some important resistance in the past few trading days, and an extension of the gains towards 0.7750 seem likely in the near-term.
Meanwhile, NZ data disappointed. New Zealand's economy grew 0.5 % quarter-on-quarter in Q1, lower than the market anticipated (0.7 %). The year-on-year figure arrived at 2.5 %, also slightly below expectations.
Looking ahead, the focus today will be on the SNB and BoE rate decisions. No changes are expected. The SNB meeting is likely to be a non-event, as usual. However, the BoE meeting could be more interesting following the recent UK CPI print. Rates will remain unchanged today, but rising inflation could push more MPC members into the hawkish camp.
Key Events: SNB Rate Decision, UK Retail Sales, BoE Rate Decision