Fed rate hold expectations intensify

Fed rate hold expectations intensify with Fed Warsh’s comments

Fed Chair Warsh spoke before an IMF summit, in which he stated that he would not “prejudge” plans for the next monetary policy decision, but that the economic conditions were “broadly” in line with the bank’s expectations. In turn this could imply that despite the recent economic readings which could have increased expectations of a Fed rate hike, the Fed Chair seemingly assured markets that this may not be something the bank has not planned for. In turn, the comments made by the Fed Chair could weigh on the greenback.

US Equites claw back some losses on a weaker dollar

As the dollar weakens following the Fed Chair’s comments which we mentioned previously, the US Equities may have clawed back some of their losses this week on the back on a weaker dollar. The US Equities markets continue to be plagued by the AI infrastructure debt concerns that surfaced in the market this week. Despite the gains being made today, the structural issue remains with the debt incurred from AI infrastructure just taking the second place on the news calendar for the day. Yet, the issue stemmed from concern as to how payments and companies would fair during a high interest rate environment; therefore, as market expectations of a restrictive Fed ease, we may see those worries subsiding which could aid equities markets.

Oil prices in focus as CNN reports that the US is considering the use of “MOAB” against Iran

Oil (Minyak) prices edged lower in today’s Asian session following a weakening of the dollar during Fed Chair Warsh’s comments at the IMF summit in Bangkok. However, our focus is the recent report by CNN which states that according to their sources, the US Military has drawn up  new strike plans for the use of the “Mother of All Bombs” which is the largest non-nuclear bomb in the US arsenal. In turn, the use of such an explosive ordnance could severely escalate the situation in the region, which could be followed by a significant military escalation. In turn, in the event that it appears that the US may use such a bomb could provide support for oil prices as the oil supply chain in the region may be heavily disrupted.

Other highlights for today

Today we get EU’s final HICP rate for September and the US industrial production rate on a month on month basis for  September. Another highlight is Tesla’s new car which was unveiled today.

Charts to keep an eye out

EUR/USD Daily Chart

EUR/USD appears to be  moving higher following the weakening of the dollar during today’s Asian session. We opt for a sideways bias for the pair and supporting our case is the break above our 1.1195 (S1) support level. For our sideways bias to be maintained, we would require the pair to remain confined between our 1.1195 (S1) support level and our 1.1470 (R1) resistance line. On the other hand, for a bearish outlook, we would require a clear break below our 1.1195 (S1) support level, with the next possible target for the bears being our 1.0960 (S2) support line. Lastly, for a bullish outlook, we would require a clear break above 1.1470 (R1) resistance level, with the next possible target for the bulls being our 1.1680 (R2) resistance line.

WTI Cash Daily Chart

WTI appears to be in the red today, yet overall we would still maintain a predominantly bullish outlook for the commodity. Our bullish outlook is supported by the RSI indicator below our chart which currently registers a figure close to 60 implying a bullish market sentiment, in addition to the upwards moving trendline. For our bullish outlook to be maintained we would require a break above our 97.95 (R1) resistance level with the next possible target for the bulls being our 102.05 (R2) resistance level. On the other hand, for a sideways bias we would require the commodity’s price to remain confined between 92.35 (S1) level and our 97.95 (R1) line. Lastly, for a bearish outlook we would require a break below our 93.25 (S1) support level with the next possible target for the bears being our 86.45 (S2) support level.

DISCLAIMER: This content is for general informational and educational purposes only and should not be considered investment advice or investment recommendation.