FOMC Meeting Minutes reveal long term fears

The FOMC June meeting minutes that were released yesterday, indicated that the Fed is concerned that current measures may have not been sufficient, as “core inflation had not shown a sustained easing since the beginning of the year”, potentially hinting that the bank may have to continue on its aggressive rate hiking policy to reach the bank’s 2% inflation target. Furthermore New York Fed President William in a speech yesterday, stated that he is “not content with where inflation is right now”, further supporting the theory that the Fed may have no alternative but to continue hiking interest rates, despite the bank remaining on hold during their last monetary policy meeting. In the US equities markets, we note the release of a perceived competitor to Twitter, created by Meta (#FB) named “Threads” that is due to launch today in America. Touted as Twitter’s greatest threat, the app has yet to clear some hurdles regarding data protection regulations and as such will not be launching in Europe for the time being. We note some interesting developments in the oil markets, following the beginning of OPEC’s two-day seminar which started yesterday. The UAE’s energy minister stated that they would not be announcing any extra voluntary cuts, striking a blow to the Kingdom’s ambitions to drive oil prices up, following a statement by Saudi Arabia’s energy minister that the recent production cuts by Riyadh and Moscow showed ‘unity’. Furthermore, the energy minister stated that “the market will not be left unattended”, seemingly showing cracks in the perceived unity of OPEC, with Saudi Arabia trying to increase prices, whilst other nations are attempting to increase production, or at the very least keep them at current levels.

WTICash appears to continue moving in upwards fashion. We maintain a bullish outlook for the commodity and supporting our case is the upwards moving trendline and an upwards moving channel incepted on the 28 of June in addition to the RSI indicator below our 4-Hour chart nearing above the figure of 70, implying a bullish market sentiment. For our bullish outlook to continue, we would like to see a clear break above the 72.50 (R1) resistance level, with the next possible target for the bulls potentially being the 75.15 (R2) resistance level. On the other hand, for a bearish outlook we would like to see a clear break below the 70.15 (S1) support level, with the next possible target for the bears being the 67.65 (S2) support base.

USD/JPY appears to be moving in a downwards fashion and is currently testing support at 143.65 (S1). We maintain a bearish outlook for the pair and supporting our case is the RSI indicator below our 4-Hour chart, registering a figure near 30, implying a bearish market sentiment. For our bearish outlook to continue we would like to see a clear break below the 143.65 (S1) support level with the next possible target for the bears being the 142.30 (S2) support base. On the other hand, for a bullish outlook we would like to see a clear break above the 145.10 (R1) resistance level, with the next possible target for the bulls being the 146.80 (R2) resistance ceiling.

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In today’s European session we note the release of Germany’s industrial orders for May, Eurozone’s and the UK’s construction PMI figures for June and the Eurozone’s retail sales growth rate for May. In the American session, we note the release of the US ADP national employment figure for June, the weekly initial jobless claims figure, Canadas’ trade data for May, the US ISM non-manufacturing PMI figure for June, the US JOLTS job openings figure for May, while oil traders may be more interested in the release of EIA weekly crude oil inventories figure. On the monetary front we note that Dallas Fed President Logan is scheduled to speak as is ECB policymaker Nagel. On a more fundamental level, we note US treasury Secretary Yellen’s trip to China. During tomorrow’s Asian session, we note from Japan the All-household spending growth rate for May.