FOMC

Gold’s now testing its 100-day MA and the 14-day RSI is at its lowest level in a year, hinting at a near-term bounce.

The expected 25 cut was delivered. But the Fed were understandably cautious regarding future cuts, given they don't know which or how many of Trump’s inflationary policies will see the day of light. And that means the current pullback on the USD and yields could be limited.

US index futures edged higher in early European trading, but after a strong two-day rally, momentum might slow ahead of the Federal Reserve’s rate decision. With a 25-basis-point rate cut fully priced in, the focus will shift to the Fed's tone on future cuts.

Gold Outlook: As market certainty grows post-U.S. elections and the dollar rallies in response to potential inflation risks, gold has faced a sharp pullback. The yellow metal, previously in overbought territory on its monthly timeframe, has plunged nearly 100 points, recharging momentum ahead of tonight's FOMC meeting.

We finally get a bit of a breather from the US election and can shift out attention to today’s BOE and FOMC meetings, making it an ideal time to catch up on GBP/USD.

The US dollar and yields have enjoyed a strong rally over the past five weeks, thanks to hotter US data, Fed members pushing back on rate cuts, and Trump leading in many polls. But with the US election on our doorstep and the potential for a delayed result, could this tie the Fed’s hands at this week’s meeting?

EURUSD Forecast: EURUSD’s recent bullish reversal above the 1.08 mark will face a critical test this week as US election results and the FOMC meeting inject volatility into the markets.

Crude Oil Week Ahead: In the coming week, crude oil markets face heightened volatility risks due to a closely contested US election on Tuesday, uncertain FOMC meeting on Thursday, and persistent geopolitical conflicts.

GBPUSD Outlook: GBPUSD is trading on bullish grounds ahead of the monetary policy decisions and outlooks of the Fed and Bank of England.

USD/JPY could move wildly this week as dovish pricing for the US interest rate outlook collide with FOMC and BOJ policy decisions. It’s an environment that could resurrect carry trades or see then unwind rapidly. Be nimble and watch for obvious price signals to determine potential turning points.

Crude Oil Outlook: Oil rebounded from the critical $65 support level, driven by hurricane-related supply disruptions and increasing odds of a 50bps Fed rate cut. The market is bracing for further volatility ahead of Wednesday's highly anticipated FOMC meeting.

Next week brings three major central bank meetings, none of which seem to be on the same page policy wise. The Fed are expected to cut by 25bp and potentially set the record straight on another ‘50bp’ cut November, whereas there’s also an outside chance the BOJ may surprise with an interest rate hike given their renewed hawkish narrative. And while the Bank of England are expected to hold rates, a soft set of inflation figures could bring forward bets of a November cut.

Crude Oil Outlook: As disappointing economic data from China persists and the potential for a ceasefire in the Middle East dominates headlines, bearish pressures are driving oil prices back towards the lower end of the $70 range.

Flash PMIs are the notable economic data releases nest week, although the headline event will be Jerome Powell’s speech at the annual Jackson Hole symposium. It will allow him to hammer home the Fed’s stance on Friday, and therefore likely to take precedence over the FOMC minutes released two days prior. Canada’s inflation report is key for BOC watchers, who continue to make their cash rate decision on a ‘per meeting’ basis.

Wednesday was a day of divergent policies that saw the Bank of Japan (BOJ) hike rates more than expected and the Fed signal a cut. And that saw the US dollar and yen broadly move their separate ways.

Bond traders are stepping back into the market on bets that the Fed will deliver a dovish hold today, which weighed on the US dollar and supported gold, silver and copper ahead of today’s FOMC meeting.

The US Dollar Index (DXY) is testing the critical 104.50 level – today’s close will be key.