Markets
could offer a muted response to the meeting, especially when considering how
there will be no updated economic projections or post-announcement press
conference by Federal Reserve Chairman Jerome Powell. Although US interest
rates are widely expected to be left unchanged in July, investors are more
likely to be concerned with any potential tweaks in the language of the policy
statement. Buying sentiment towards the Dollar could receive a boost if the
central bank strikes a hawkish tone. With the fundamental drivers behind the
Dollar’s appreciation in recent months still intact, the outlook remains tilted
to the upside.
Regarding
the technical picture, the Dollar Index has found itself in a messy range on
the daily charts with support around 94.00 and resistance slightly below the
95.00 level. Bulls need to conquer the 95.00 level for the Dollar Index to
witness further upside towards 95.50.
Pound edges
higher, but for how long?
Will
the Bank of England come to the Pound’s rescue, or will it send the currency
tumbling this week? This remains a question on the minds of many market
players. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
Although
the Bank of England is expected to raise interest rates on Thursday, there is
mixed caution in the air that the central bank may once again backtrack from
market expectations. With inflationary pressures cooling, wage growth
disappointing and Brexit uncertainty weighing on sentiment, it will be
interesting to see what argument the BoE presents in the event of a rate hike.
A
situation where the central bank leaves interest rates unchanged could spell
nothing but further pain for the Pound. However, an interest rate hike may end
up offering the battered Pound that much-needed lifeline. Focusing on the
technical picture, the GBPUSD has scope to sink lower if prices secure a solid
daily close below 1.3084. Alternatively, a breakout above 1.3150 could encourage
an incline towards 1.3208.
Commodity
spotlight – Gold
It has
certainly been another painfully bearish trading month for Gold, thanks mostly
to a broadly stronger Dollar and heightened US rate hike expectations. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
The
yellow metal has clearly struggled to register any meaningful recovery in
recent weeks, despite global trade tensions creating uncertainty and
stimulating risk aversion. With the yellow metal likely to remain highly
sensitive to the negative correlation against the Dollar, further losses may be
witnessed moving forward. Investors may be offered a fresh opportunity to send
the zero-yielding metal lower this week if the Federal Reserve strikes a
hawkish tone and Friday’s US jobs report exceeds market expectations. Regarding
the technical picture, Gold is heavily bearish on the daily charts. A solid
breakdown below $1213 could trigger a decline towards the psychological $1200
level. Bears remain in firm control below the $1234 resistance level.
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