Michigan Consumer Sentiment data as expected. The table is set for the FOMC!
Yesterday we pondered what could happen if the Michigan Consumer Sentiment Index inflation expectations components came out higher than expected. Would the Fed again leak a headline to the Wall Street Journal that it will raise rates more than expected, as it had done during June? Well, the question seems to be mute right now as the data was roughly as expected. The headline Michigan Consumer Sentiment Preliminary reading for September was 59.5 vs 60 expected and a reading of 58.2 in August. More importantly, the 1-year Inflation Expectations reading was 4.6% vs 4.7% expected and 4.8% in July. This was the lowest level since September 2021. The 5-year Inflation Expectations reading fell to 2.8% vs 2.9% expected and 2.9% prior. This was the lowest reading since July 2021. As a result of this data, the FOMC is likely to raise rates by 75bps next week, as expected.
EUR/USD immediately went bid after there release of the print, as fears of a 100bps rate hike next month were diminished. The pair quickly moved towards parity.
Source: Tradingview, Stone X
On a daily timeframe, EUR/USD has been trading in a downward sloping channel since making yearly highs on February 10th at 1.1498. After breaking 1.0000 and testing support at the bottom downward sloping trendline of the channel, EUR/USD bounced to test strong horizontal resistance at the top trendline of the channel near 1.0340. Since then, the pair has moved lower and made a 20 year low at 0.9864 before bouncing to the 61.8% Fibonacci retracement level from the high of August 10th to the lows of September 6th, near 1.0176 (this was also the top trendline of the channel once again). Price then pulled back to parity on September 13th and has been oscillating around it since.
Source: Tradingview, Stone X
Trade EUR/USD now: Login or Open a new account!
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
On a 240-minute timeframe, first resistance is at the lows of September 12th at 1.0104. Above there, resistance is at the top trendline of the long-term term channel near 1.0140, then the highs from September 12th at 1.1098. However, if EUR/USD can’t hold its bid and moves lower, the first support is at today’s low of 0.9945, then the lows from September 6th at 0.9869. Below there, the next support level is at the 127.2% Fibonacci extension from the lows of September 6th to the highs of September 12th, near 0.9775.
Source: Tradingview, Stone X
The FOMC meets on Wednesday this week and is likely to lift the Fed Funds rate by 75bps from 2.5% to 3.25%. Prior to today’s Michigan Consumer Sentiment data, markets expected there to be a higher chance that the Fed would hike 100bps. However, after seeing today’s inflation components of the data, that chance has fallen to only 16%.
Learn more about forex trading opportunities.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.
ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.
City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.
The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.
The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.
The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
© City Index 2024