Preview of the Fed meeting: 75 bp Move is Fully Priced and “Sell the Facts” Scenario is Likely in the Dollar

The Fed will likely yield to the hawkish market expectations and hike interest rate by 75 bp today. Nevertheless, even with such an aggressive move, it cannot be ruled out that the dollar will go into decline following the meeting. Why? Since last Friday, when the May CPI was released, the dollar index has strengthened by a significant 2.4%, setting a new local extreme (105+). Such a move has likely already priced in a 75bp increase in the federal funds rate, so without additional surprises related to the pace of the timeframe of QT or a sharp revision in Dot Plot, a FOMC meeting broadly in line with expectations could become a profit taking signal. In other words, the classic “sell on the facts” scenario can be executed in the dollar market.Asset prices on the market, as well as expectations for the June meeting of the Fed, have changed significantly over the past week. Futures on the Fed rate have completely priced out an outcome where the Fed hikes rate by 50bp. This was supported by inflation data for May and inflation expectations from U. Michigan: headline inflation rose from 8.3% to 8.6% and 5-year inflation expectations of households jumped from 3% to 3.3%. Media reports, that the Fed policymakers were seriously discussing the possibility of raising rate by 75 bp, did their job as the market regarded them as an attempt by the Fed to prepare the markets for such a move during the blackout period - the week leading up to the meeting, when Fed officials are not allowed to make policy statements. In terms of market dynamics, key U.S. stock market indices are down nearly 9% and there is a chance the Fed may try to choose a softer path to limit correction or even boost stock market gains so that the welfare effect smooth out the negative impact of inflation on consumption propensity.The upcoming Fed meeting is especially important because it will feature an updated Dot Plot - a chart showing the distribution of FOMC participants' assessments of where the interest rate should be in the short, medium and long term. The latest Dot Plot was published in March and looked like this:It's been three months since then and inflation hasn't gone down, so markets now expect the Fed's rate to be in the 3.5-3.75% range by the end of the year. The Fed will most likely move the median forecast to this range, but officials’ expectations regarding the rate next year and 2024 will become more important for the market. If at least a few officials are in favor of raising the rate to 4% and above, then most likely we will see a new rally in DXY to 105.50 or even higher, as expectations for tightening from other major central banks are much more modest.US retail sales data for May came with a big downside surprise today pointing to increased risks of stagflation for the US economy:It is interesting that the negative reaction of the dollar to the report did not last long, as a weak consumption report could increase the chances that the Fed will fight hard against the main negative factor - high inflation and aggressively raise the rate today:

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/preview-of-the-fed-meeting-75-bp-move-is-fully-priced-and-sell-the-facts-scenario-is-likely-in-the-dollar"
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CRUDE OIL FUTURES (CL1!), H1 Potential For Bullish Momentum

Type: Bullish RiseKey Levels:Resistance: 9976Pivot: 9202|Support: 9124Preferred Case:On the H4, with price moving above the icihimoku cloud and within the ascending trend channel, we have a bullish bias that price will rise from the pivot at 9202 in line with the 78.6% fibonacci projection to the 1st resistance at 9976 at the horizontal swing high.Alternative Scenario:Alternatively, price may drop from the pivot to the 1st overlap support at 8668 in line with the 78.6% fibonacci projection .Fundamentals:The worries over a recession in the US and the ongoing Covid-19 situation in China are likely to balance the supply-side constraints faced by oil producers, resulting in a mixed bias for crude oil .

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/crude-oil-futures-cl1-h1-potential-for-bullish-momentum15"
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CANADIAN DOLLAR FUTURES (6C1!), H1 Potential For Bearish Drop

Type: Bearish MomentumKey Levels:Resistance: 0.77520Pivot: 0.77310Support: 0.76480Preferred Case:On the H1, with price moving below the ichimoku indicator, we have a bearish bias that price will drop from our pivot at 0.77310 in line with the swing high resistance to the 1st support at 0.76480 in line with the 161.80% fibonacci extension , 100% fibonacci projection and swing low support.Alternative Scenario:Alternatively, price may break the pivot structure and rise to the 1st resistance at 0.77520 in line with the overlap resistance and 78.6% fibonacci retracement .Fundamentals:The prospect of a more aggressive Fed saw further gains in the USD/CAD pair. At the same time, an oversold CAD is deemed from the equally hawkish BoC and firm oil prices resulting in mixed to weak bullish view for the Canadian Dollar Future.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/canadian-dollar-futures-6c1-h1-potential-for-bearish-drop"
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BRITISH POUND FUTURES (6B1!), H1 Potential For Bearish Drop

Type: Bearish MomentumKey Levels:Resistance: 1.2124Pivot: 1.2057Support: 1.1855Preferred Case:On the H1, price is moving below the ichimoku cloud which supports our bearish bias that price will drop from our pivot at 1.2057 in line with the swing high resistance to the 1st support at 1.1855 in line with the 78.6% fibonacci projection and 161.8% fibonacci extension .Alternative Scenario:Alternatively, price may break through pivot structure and rise to the 1st resistance level at 1.2124 in line with the pullback resistance, 23.6% fibonacci retracement and 78.6% fibonacci projection .Fundamentals:In the central bank notes, a third of the six members who voted for a hike viewed that the latest increase marked the end of the current hiking cycle while peak inflation revised to more than 10%, adding to the stagflation fears; possible GDP contraction in 2023, giving us a mixed bias for British Pound Futures .

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/british-pound-futures-6b1-h1-potential-for-bearish-drop15"
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RICE FUTURES (ZR1!), H1 Potential For Bearish Momentum

Type: Bearish MomentumKey Levels:Resistance: 16.990Pivot: 16.725Support: 16.125Preferred Case:On the H1, with price moving below the ichimoku indicator and within the descending channel , we have a bearish bias that price will rise to and drop from our pivot at 16.725 in line with the 38.2% fibonacci retracement and overlap resistance to the 1st support at 16.125 in line with the 161.8% fibonacci extension and swing low support.Alternative Scenario:Alternatively, price may break the pivot structure and rise to the 1st resistance at 16.990 in line with the overlap resistance, 100% fibonacci projection and 50% fibonacci retracement .Fundamentals:Since both countries, Russia and Ukraine, are major exporter of agriculture goods and their persistent war will lead to a shortage of agricultural goods and give us a bullish bias for rice.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/rice-futures-zr1-h1-potential-for-bearish-momentum15"
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CORN, H4 Potential for Bullish Momentum

Type: Bullish RiseKey Levels:Resistance: 781'0Pivot: 759'0Support: 749'2Preferred Case:On the H4, with price moving above the ichimoku cloud and within the ascending trend channel, we have a bullish bias that price will rise from our pivot at 759'0 in line with the overlap support to to 1st resistance at 781'0 in line with the 61.8% fibonacci retrcaement and multiple swing high.Alternative Scenario:Alternatively, price may break support structure at the pivot and drop to the 1st support at 749'2 at the pullback support and 61.8% fibonacci projection .Fundamentals:No major news

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/corn-h4-potential-for-bullish-momentum"
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CORN, H4 | Potential Bullish Continuation

Type: Bullish BounceKey Levels:Resistance: 782.67Pivot: 759.74Support: 751.12Preferred Case:On the H4, with price moving above the ichimoku cloud and within the ascending trend channel, we have a bullish bias that price will rise from our pivot at 759.74 in line with the 78.6% fibonacci projection and overlap support to to 1st resistance at 782.67 in line with the 61.8% fibonacci retrcaement and multiple swing highAlternative Scenario:Alternatively, price may break support structure at the pivot and drop to the 1st support at 751.12 at the pullback support.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/corn-h4-or-potential-bullish-continuation"
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SI1!, H4 | Potential Bearish Continuation

Type: Bearish BreakoutKey Levels:Resistance: 21.448Pivot: 20.915Support: 20.429Preferred Case:On the H4, with price moving below the ichimoku cloud, we have a bearish bias that price will drop from the pivot at 20.915 at the swing low to our 1st support at 20.429 in line with the horizontal swing low.Alternative Scenario:Alternatively, price may rise form the pivot to the pullback resistance at 21.448 in line with the confluence area between 61.8% fibonacci projection, 100% fibonacci projection and 50% fibonacci retracement.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/si1-h4-or-potential-bearish-continuation"
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AUDJPY – Intraday View – FOMC Day

AUDJPY, H1

After closing the market risk since the end of last week the Japanese Yen returned to strength temporarily, compared to the world’s major currencies, but it remains weak against the US Dollar. This is a result of the Fed’s view of accelerating interest rates, and is likely to happen again this week, while the BoJ is likely to keep its interest rate policy negative.

However, the weakening of the Japanese Yen and the AUDJPY pair, one of the indicators of market sentiment, is now visible. It has risen from the June low at the 92.50 zone to trade at 93.50 now, partly due to better-than-expected May Chinese economic data. China’s industrial production unexpectedly grew 0.7% after -2.9% in April, and the unemployment rate dropped from 6.1% in April to 5.9% in May. Meanwhile, retail numbers fell less than expected at -6.7% year-on-year, compared with forecasts of -7.1% and -11.1% last month.

As of this morning, Australia’s June consumer confidence numbers continued to decline for the seventh straight month, at the lowest level since April 2020 at 86.4 (-4.5%), owing to concerns about inflation and the acceleration of interest rate hikes of the central bank.

In the technical view, the AUDJPY pair today sees a bullish divergence as the MACD is starting to enter positive territory. There was the first resistance at yesterday’s high at 93.85 and the next resistance at the MA200 line at 94.80. Key support remains at the June low at 92.50.

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Chayut Vachirathanakit

Market Analyst

 

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

from HF Analysis /478294/
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GBPUSD, H4 | Potential Bearish Momentum

Type: Bearish ReversalKey Levels:Resistance: 1.2183Pivot: 1.21045Support: 1.17882Preferred Case:On the H4, with prices moving below the ichimoku indicator, we have a bearish bias that price will drop from our pivot at 1.21045 where the horizontal pullback resistance and 23.6% fibonacci retracement are to our 1st support at 1.17882 in line with the 78.6% fibonacci projection and 61.8% fibonacci projection .Alternative Scenario:Alternatively, price may break pivot structure and head for 1st resistance at 1.2183 where the horizontal overlap resistance and 38.2% fibonacci retracement are.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/gbpusd-h4-or-potential-bearish-momentum15"
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Market Spotlight: EUR Rallies As ECB Announces Emergency Meeting

EUR Bid on ECB NewsThe Euro has been heavily bid today on the back of news that the ECB has called an emergency meeting. The central bank has called an unscheduled meeting to address financial market conditions on the back of a steep rise in borrowing costs for individual EU member governments over the last week. Expectations of forthcoming ECB tightening, along with fears over the impact on the eurozone economy, have pushed bond yields to painful levels for countries such as Italy. While no details have been given, a speech by ECB’s Schnabel ahead of the announcement suggests that the ECB will outline measures to address this fragmentation in financial markets, especially as it pushes ahead with tightening.Technical ViewsEURGBPFollowing the breakout above the bearish trend line, EURGBP has now broken out of the subsequent triangle holding-pattern which formed on the back of that break. The move, which took out the former .8659 level resistance, has seen price trading up to test huge resistance at the .8719 level. This is a major level for the pair and, while stalling for now, bullish MACD and RSI readings suggest potential for a further move higher putting the focus on .8869 above.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/market-spotlight-eur-rallies-as-ecb-announces-emergency-meeting"
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GC1!, H4 | Potential Bearish Momentum

Type: Bearish ReversalKey Levels:Resistance: 1830.4Pivot: 1818.4Support: 1787.3Preferred Case:On the H4, with prices moving below the ichimoku indicator, we have a bearish bias that prices will drop from our pivot at 1818.4 where the horizontal pullback resistance and 23.6% fibonacci retracement are to our 1st support at 1787.3 in line with swing low support and 78.6% fibonacci projection.Alternative Scenario:Alternatively, price may break pivot structure and head for 1st resistance at 1830.4 in line with overlap resistance and 38.2% fibonacci retracement.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/gc1-h4-or-potential-bearish-momentum15"
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As oil prices surge, should you buy BP shares?

The imbalance between supply and demand has sent the oil price surging, bringing bumper profits to oil giant BP. Rupert Hargreaves looks at the numbers and asks if BP shares deserve a place in your portfolio.

from Moneyweek RSS Feed https://moneyweek.com/investments/stocks-and-shares/energy-stocks/604721/should-you-buy-bp-shares-oil-giant-looks-cheap
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Despite cooling UK house prices, builders are charging ahead

The rate of UK house price growth is slowing. But demand for new houses remains high, and housebuilders are firing on all cylinders. Rupert Hargreaves picks the best stocks in the sector.

from Moneyweek RSS Feed https://moneyweek.com/investments/stocks-and-shares/share-tips/604978/housebuilders-shares-to-buy-now
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