IT'S not often that the market behaves almost exactly according to script but this week was one such occasion. The main feature was the US Federal Open Markets Committee meeting over Tuesday and Wednesday and markets traded generally cautiously ahead of the event, given that US labour market releases have shown strength, which in turn implied greater urgency for interest rate hikes.
In the meantime, everyone watched to see if the word "patient" would be dropped from the post-FOMC meeting statement and as it turned out, it was dropped.
Although markets then rallied because the statement was supposedly more dovish than expected, it should be pointed out that throughout the past 8 years the Fed has taken great pains to accommodate Wall Street, so an overtly hawkish statement was hardly likely.
TRADING TIPS :
GBP/USD pulled away from 1.4796, the session low, to hit 1.4895 during European morning trade, still down 0.58%.Cable was likely to find support at 1.4721, Tuesday’s low and resistance at 1.5148, Wednesday’s high.The dollar regained some ground after broadly weakening when the Fed indicated on Wednesday that U.S. economic growth has moderated and that interest rates will rise at a slower pace than previously forecast .The pound trimmed losses against the U.S. dollar on Thursday, but remained under pressure as the greenback continued to recover from news U.S. interest rates will most likely remain on hold for longer than expected. The pound had dropped to nearly five-year lows against the greenback earlier Wednesday after the U.K. Office for National Statistics said that the rate of unemployment was unchanged at 5.7% in the three months to January,
INTRADAY OUTLOOK
Support: 1.4710
Resistance: 1.4770
RECOMMENDATION:
1. Buy GBP/USD Above 1.4772-TG: 1.4792/1.4822 SL 1.4742
2. Sell GBP/USD Below 1.4708-TG: 1.4688/1.4658 SL 1.4738
INTRADAY OUTLOOK
Support: 1.0670
Resistance: 1.0730
RECOMMENDATION:
1. Buy EUR/USD Above 1.0732-TG: 1.0752/1.0782 SL 1.0702
2. Sell EUR/USD Below 1.0668-TG: 1.0648/1.0618 SL 1.0698
INTERNATIONAL COMMODITY NEWS :
Gold prices posted a moderate gain in early Asia on Friday as investors continued to ponder Federal Reserve tea leaves on the prospects of a rate hike by June. On the Comex division of the New York Mercantile Exchange, gold futures for April deliveries rose 0.16% to $1,170.90 a troy ounce. Overnight, gold prices soared for the second consecutive session, one day after somewhat dovish comments from Federal Reserve chair Janet Yellen regarding a potential interest rate hike helped the precious metal rebound from an extended slump. Although the Federal Open Market Committee removed a reference to remaining patient from its minutes on Wednesday, Yellen insisted that it does not mean that the Fed will raise interest rates by June at the earliest. On the contrary, Yellen asserted that the timing of the decision will be “data dependent,” as the Fed considers indicators such as GDP growth, wage increases and inflation.
TRADING STRATEGY :
BUY GOLD ABOVE 1174 TARGET 1179 1185 SL 1168
SELL GOLD BELOW 1166 TARGET 1161 1155 SL 1172
