21-09-2023 - Pos-FOMC and BoE rate decision
Gold continuation sells and no hike on BoE
Today, the day after FOMC, we had continuation sells move on Gold, no rate hike of Bank of England, dovish speech of Governor Bailey and DXY printed new highs but failed to hold with mixed US data.
Today, beside the usual jobless claims, we had another important CB decision rate of BoE. As we highlighted on our report, yesterday low CPI data results for UK with 6.7% inflation rate against the previous 6.8% and expected 7%, BoE decided to keep interest rate as-is in 5.25% when the expectations were to rise plus 25bps at least until the CPI results. During the speech Gov. Bailey adopted a dovish stance believing that October inflation will keep decreasing not seeing needs to hike again but keep them higher for longer not disclosing if nor when they will hike:
We will be watching closely to see if further increases are needed… We will need to keep interest rates high enough for long enough to ensure that we get the job done. Whatever happens we will do what is needed to get inflation back to normal.
Gov. Bailey
After such report, we came into NY with the usual Jobless Claims and today also Philly Fed Manufacturing with mixed data. Jobless Claims revealed to be optimistic with 201K against a upwardly revision from 220K to 221K where expectations were to increase.
This keep giving good signs that labor market still tight and healthy conditions inline with soft landing narrative from FED. On the other hand Philadelphia Manufacturing Index came very poor and the strong interval from previous 12 to -0.7 expectations were well beaten to a result of -13.5 opposing the health data that came last week for the same report but for New York State.
The result of such mixed data made Gold to pullback from lows of the day but overall kept ranging after NY Session. DXY was able to print new daily and weekly highs but broke is own daily lows and probably closing day within 105.4s.
The previous sessions we assisted to a quiet markets where we can see Gold price setting up for FOMC decision with buyers pushing price up for sellers jumping in and provide the exit relief. Usually and as we referred also on our overview, Gold keep the same sentiment for the next day and today we were also able to take advantage of the sells and print new daily and weekly lows.
Tomorrow for US we have flash PMI figures in different sectors during NYSE and we keep playing the dollar bulls and gold bears with optimistic US data. Also to keep in mind and for JPY pairs trading we will have Japan inflation figures which is expected to remain at 3.3% and the probable release of BoJ Interest rate decision in which the most important aspect is the same as ECB, FOMC and BoE, the remarks from Ueda on what they plan to do. Remember that they are the best on “You talk the talk, do you walk the walk?” in the way that they can threat to hike, tightening, etc.. but they keep the stimulus and easing. This leads to increase volatility in the way that hawkish remarks make JPY strength but dovish actions keep it bearish so adapt accordingly.
Trade Safe and trade Smart.