Economic calendar
Monday- UK, China bank holiday
Tuesday- China, Japan bank holiday, RBA interest rates
Wednesday- China, Japan bank holiday, ADP Non-farm employment change
Thursday- Japan bank holiday, FOMC statement, GBP monetary policy, and interest rate
Friday- NFP
We should all keep an eye on the post-FOMC press conference as Jerome Powell may provide a lot more information in regards to interest rates and markets in general. It is expected that the Fed is going to raise interest rates by 50 basis points in May and June, but considering how overheated the inflation figure has become, there may be surprises. We also have Australia and UK announcing their interest rates later this week. Are they going to follow suit and raise interest rates together with the Fed?
USDJPY
We are also very excited about USDJPY. Bank of Japan is offline until Friday while the Fed is raising interest rates and Powell making comments. Its volatility may increase even more amidst trading at decades-high levels.
USDJPY H4
Technical-wise, the resistance turned support is holding up pretty well while working together with the 50 moving average to keep prices in the bullish territory. It is very likely that prices will continue upwards with the next medium-term target at 133.82.
Gold
Gold H4
In our previous analysis, we thought gold was doing another fake-out as it traded back into its consolidation zone. Turns out, it is continuing its downward move as the New York session commenced last Friday. The faster 50 moving average also crosses below the 200 moving average which is a bearish technical signal. At the time of writing, it is approaching the demand zone marked in blue again.
As for now, I am just sitting on the sidelines and waiting patiently for the FOMC meeting later this Thursday for a clearer directional bias in the medium to long term. I would also like to see how other market participants react to Powell’s statement while processing all the macroeconomic and political uncertainties around the world.
Oil
Crude oil breached $105 per barrel last week but it failed to close above. Apparently, the slowing down in China’s demand is outweighing supply concerns fears as the EU is looking to ban Russian Crude. If a short-term retracement is to take place, $94 would act as the most solid support. Otherwise, we are still aiming at $115 as our next target.
US Stocks
The stock market is not reacting too well to the interest rate hike plans. In a textbook scenario, higher interest rates make it costlier for businesses to take loans, make investments, etc. which would reduce their bottom line performance in terms of revenues and profit margins. Thus, investors' confidence drops, and capital flees away for higher returns assets.
SP500 Daily
SP500 closed 2.9% lower last Friday. It crashed into 4150 level with a big red candle but did not penetrate it. You can also look at the pre-markets before the market open to get a better grasp of where the market will open.
Nasdaq Daily
Tech-focused Nasdaq is trading around 13000 key levels. However, it feels like the prices are getting heavier and the index could fall to the next support at 12300. FOMC statement remains the most important catalyst this week for all USD-related assets.
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Welf
Trader, Technical Analyst
