The market is largely in a holding pattern as everyone is focusing on the FOMC meeting which has left most dollar-denominated assets and currency pairs in range-bound price action.
The market has priced in the fourth hike but key take away from today’s statement is forward guidance for Fed’s 2019 rate hike plans. Recent macro data release from key markets across globe hint at a slowdown in economic growth in all markets. This case is same even in US markets which have led analysts to believe that US central bank will most likely pause its rate hike plans for 2019 instead of just decreasing the number of rate hikes as is widely believed by most traders.
Crude Oil Trades Positive Post Overnight Slump
Recent U.S. economic data was not encouraging and there is constant pressure from U.S. President Donald Trump on the Fed to pause rate hikes despite Fed Chair Powell commenting that Trump’s poking at feds will have no impact on their decision. However, he also commented that future rate hikes will be data dependent and macro data paints a bearish scenario which validates cause for temporary pause in rate hikes. Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar.
The dollar index USD/DXY which measures the greenback against a basket of six major currencies is down 0.36% on dovish sentiment prevalent around USD in the broad market ahead of FOMC update. As of writing this article, Spot gold XAU/USD is currently trading at $ 1250.07 per ounce up by 0.04% on the day, while US gold futures GCcv1 are trading at $1254.30 per ounce up by 0.05% on the day.
Spot Silver XAG/USD is trading at $14.69 per ounce up by 0.36% on the day. Crude oil futures moved higher during mid-morning trade in Asia Wednesday, recovering from an overnight slump that saw prices plunge by more than $3/b, amid mild bargain hunting. The market is now waiting for US crude stocks data scheduled to release later today for price direction. Prices are consolidating this morning amid some bargain hunting after the crash last night, however, overall sentiment remains weak. Both benchmark contracts touched fresh one-year lows yesterday pressured by a poor economic outlook and growing supply concerns. API data released yesterday saw US crude stocks rise by 3.45 million barrels for the week ended on December 14. Spot Crude WTIUSD is currently trading at $46.39 up by 1.09% on the day.