Daily Analysis: Markets Paralyzed as Fed-Meeting Looms

Tuesday Market Recap

Asset Current Value Daily Change
S&P 500 2443 0.11%
DAX 12561 0.05%
WTI Crude Oil 49.87 -0.93%
GOLD 1312.00 0.11%
Bitcoin 4015 0.95%
EUR/USD 1.1993 0.33%

Global stock markets are having a very quiet session before tomorrow’s crucial Federal Reserve meeting that will likely stir up the current trends. Interestingly the Volatility Index (VIX) is edging higher, as institutional players are placing hedges before the unusually uncertain meeting. Short-dated Treasuries are pricing in a hawkish shift by the Fed, and with the expected announcement of the reduction of the central bank’s balance sheet, a lot of things might cause surprises. We also expect a more hawkish Fed following the shift by the BOC and the BOE recently, with a possible spike in the Dollar following the announcement.

DXY, Daily Chart Analysis

Forex markets were also calmer than in recent days, with only the Aussie and the New Zealand Dollar rallying substantially after the RBA’s meeting minutes and a bullish HPI-release from Australia.  The Euro also ticked higher as the German ZEW index came in much better than expected, but the major pairs are close to unchanged as trading volumes lightened ahead of the week’s main event. Donald Trump gave a controversial speech in the UN, stating that North Korea might need to be destroyed, but investors ignored the President’s words, as safe haven assets remained stable. Gold and the Japanese Yen are hovering near their multi-week lows, as sentiment continued to be positive towards risk assets.

Gold, 4-Hour Chart Analysis

Cryptocurrencies

The segment calmed down considerably after last week’s storm, as the majors settled down following the post-crash surge. BTC is hovering around the $4000 support/resistance level, and altcoins are following the dominant coin closely, with correlations still being elevated. That fact points to the continuation of the correction, although the overbought readings of the previous rally have already been cleared during the steep sell-off. Dash, NEO, and IOTA are showing relative strength, while Ethereum Classic is the most notable laggard so far this week.

BTC/USD, 4-Hour Chart Analysis

Technical Picture

The Nasdaq is still in a short-term consolidation pattern just below the long-standing 6000 resistance level and the all-time highs just above it. The major tech stocks were pushed lower by the rising yields before the Fed meeting, but we still expect a break-out to new highs in the coming days, given the short-term strength in US equities. Strong support is found near 5900 and around 5750, where the rising long-term trendline is also found.

NASDAQ 100 Futures, 4-Hour Chart Analysis

Key Economic Releases on Tuesday

Time, CET Country Release Actual Expected Previous
3:30 AUSTRALIA Monetary Metting Minutes
11:00 GERMANY ZEW Economic Sentiment 17.0 12.3 10.0
14:30 CANADA Manufacturing Sales -2.6% -1.4% -1.8%
14:30 US Building Permits 1.30 mill 1.22 mill 1.23 mill

Key Economic Releases on Wednesday

Time, CET Country Release Expected Previous
10:30 UK Retail Sales 0.2% 0.3%
16:00 US Existing Home Sales 5.46 mill 5.44 mill
16:30 UK Crude Oil Inventories 5.9 mill
20:00 US FOMC Rate 1.25% 1.25%
20:00 US FOMC Statement
20:30 US FOMC Press Conference

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Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.