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Gold languishes near 29-month low in run-up to Fed meeting

 

“Don’t try to be original, just try to be good.” — Paul Rand

 

 

 HEADLINES

  • U.S. dollar advances as markets brace for hefty Fed rate hike
  • Gold languishes near 29-month low in run-up to Fed meeting
  • Oil little changed as markets debate fed hikes and supply woes
  • Wall Street flat but trading choppy ahead of Fed rate meet
  • 10-year Treasury yield jumps to 3.51%, the highest level since 2011
  • GBP/USD: Vulnerable to more losses amid lack of obvious support – Scotiabank
  • GBPUSD Near Term: Upside favored

 

 

U.S. dollar advances as markets brace for hefty Fed rate hike

 

The dollar gained against major currencies on Monday, trading within narrow ranges ahead of a slew of central bank meetings this week led by the Federal Reserve, which is likely to deliver another hefty interest rate hike.

Trade was generally subdued, with markets in London and Tokyo closed for public holidays.

World stock markets remained on edge and the dollar maintained its firm tone, given expectations that the Fed would maintain its aggressive tightening path to contain uncomfortably high inflation.

 

 

COMMODITIES

 

Gold languishes near 29-month low in run-up to Fed meeting

 

Gold prices weakened on Monday, back toward a 29-month low hit on Friday, as the dollar and Treasury yields rose on expectations the U.S. Federal Reserve will deliver a steep interest rate hike when it meets this week.

Spot gold was last down 0.25% to $1,670.7544 an ounce, holding above its lowest since April 2020 hit on Friday. U.S. gold futures fell 0.22% to $1,679.80.

The Fed, at the conclusion of its two-day policy meeting on Wednesday, is expected to raise interest rates by 75 basis points to combat stubbornly-high inflation, with markets even seeing a 20% chance for a 100 bps increase.

 

 

ENERGY

 

Oil little changed as markets debate fed hikes and supply woes

 

Oil prices held steady in volatile trading on Monday, as traders balanced worries about tight supplies with fears that global demand could slow due to a strong U.S. dollar and possible large increases to interest rates.

Central banks around the world are certain to increase borrowing costs this week to tame high inflation, and there is some risk of a full 1 percentage point rise by the U.S. Federal Reserve.

Brent crude for November last rose 18 cents to $91.53 a barrel, a 0.2% gain. U.S. West Texas Intermediate (WTI) for October rose 13 cents to $85.24 per barrel.

 

 

STOCKS

 

Wall Street flat but trading choppy ahead of Fed rate meet

 

Wall Street's main indexes were flat in the early afternoon on Monday amid choppy trading, bouncing around as investors waited to see how aggressive the Federal Reserve would be this week with its interest rate hike.

Even more so than the Ukraine war or corporate earnings, the actions of the U.S. central bank are driving market sentiment as traders try to position themselves for a rising interest rate environment.

The S&P 500 (.SPX) and the Nasdaq (.IXIC) logged their worst weekly percentage drop since June on Friday as markets fully priced in at least a 75 basis point rise in rates at the end of Fed's Sept. 20-21 policy meeting, with Fed funds futures showing a 15% chance of a whopping 100 bps increase.

Unexpectedly hot August inflation data last week also raised bets on increased rate hikes down the road, with the terminal rate for U.S. fed funds now at 4.46%.

 

10-year Treasury yield jumps to 3.51%, the highest level since 2011

 

Treasury yields climbed on Monday as traders anticipated the Federal Reserve’s next moves in the face of persistently high inflation.

The benchmark 10-year Treasury yield gained 6 basis points to 3.518%, hitting its highest level since April 2011, and was last up 2 basis points to 3.465%. The yield on the 2-year Treasury bond rose 8 basis points to trade at 3.942%, trading around levels not seen since 2007.

Yields move opposite to prices. One basis point is equivalent to 0.01%.

 

 

ANALYSIS

 

GBP/USD: Vulnerable to more losses amid lack of obvious support – Scotiabank 

 

“Sterling is soft and continues to pressure minor support (last week’s low) at the 1.1350/55 area.” 

“The broader trend lower in cable remains intense and deeply entrenched across multiple timeframes and the lack of obvious support points below the market leave the GBP/USD pair vulnerable to more losses.” 

“Key resistance is a distant 1.1740/50.”

 

 

CHART

 

GBPUSD Near Term: Upside favored

 

Technical View: Long position above 1.1375. Target 1.1443. Conversely, break below 1.1375, to open 1.1342.

Comments: The pair breaks above the resistance.

 

 

Source: Trading Central 

 

 

CALENDAR

 

*Times in GMT

 

 

Source: FX Street Economic Calendar

 

 

SOURCES

 

https://www.reuters.com/markets/us/dollar-off-20-year-peak-fed-headlines-big-central-bank-week-2022-09-19/
https://www.cnbc.com/2022/09/19/gold-markets-weak-dollar-federal-reserve-inflation-interest-rate-hikes.html
https://www.cnbc.com/2022/09/19/oil-markets-weak-dollar-supply-concerns-global-recession-russia.html
https://www.reuters.com/markets/europe/futures-fall-rate-hike-worries-2022-09-19/
https://www.cnbc.com/2022/09/19/treasury-yields-tick-higher-as-traders-anticipate-the-feds-next-move.html
https://www.fxstreet.com/news/gbp-usd-vulnerable-to-more-losses-amid-lack-of-obvious-support-scotiabank-202209191428