Market holds breath for Fed, BoE | CMC Markets Daily Commentary
There seems to be lack of economic and political events on the calendar, which rendered central bank’s interest rate decisions on top of the agenda this week. Currency market stayed composed ahead of Wednesday’s FOMC meeting and BoE decision, both of which are expected to let their policy rates remain unchanged. Traders are waiting for Powell to point to a clearer timetable to cease Fed’s balance sheet normalisation, which could be a dollar-boost.
The significance of BoE meeting, however, is likely to be overshadowed by a third round of parliament vote on May’s Brexit deal scheduled on Wednesday. The prospect of this vote isn’t bright as there is lack of substantial change in the previously rejected deal to win back majority vote of the MPs. The most likely outcome is a third rejection and then May will head to Brussels to negotiate a delay on Brexit, and that scenario could possibly provide some relief to sterling. Technically, GBP/USDis ranging between 1.322 and 1.331 area following last week’s vote results. Immediate resistance can be found at 1.335 area (78.6% Fibonacci extension), followed by a major resistance at 1.350 (100% Fibonacci Extension).
US equity indices resumed their one-way trajectory following a technical correction seen in early March. The S&P 500 index has broken out a key resistance level of 2,800 points (76.4% Fibonacci Retracement), and is likely to challenge the previous high of 2,930 points.
Similarly, Hang Seng Index has surged to an eighth-month high of 29,400 area and its immediate resistance level can be found at 30,000 area. 30,000 point is also the target price level suggested by a ‘double bottom’ pattern formed from November 2018 to January 2019.
Gold and crude oil prices both moved marginally higher overnight, driven by soft dollar. A potential catalyst for gold and crude oil prices to move higher this week sits with Fed’s FOMC statement and a clearer plan to cut its balance sheet shrinking activities. Technically, Brent Crude Oil is challenging an immediate resistance at US$68.2 area, clearing above could open room for higher high at US$ 72.5 area. Gold price needs to clear US$1,310 resistance before challenging US$1,320.
US SPX 500 – Cash
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. CMC Markets is regulated by the Monetary Authority of Singapore.