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Central bank caution prevails

Article by ForexTime

Dollar bullish investors were left empty handed on Wednesday following the Federal Reserve’s widely expected decision to keeping US interest rates unchanged. It is becoming increasingly clear that the ongoing global uncertainties have created an unstable financial landscape which continues to keep most central banks cautious. Although the decision to keep rates unchanged was warmly welcomed by global equities, the shocking divide between Fed officials is something which remains a cause for concern. With expectations hanging on a thin line over the Fed actually taking action this year, the Dollar could be vulnerable to further losses.

Repeatedly conflicting comments from Fed officials prior to the FOMC meeting had already created a thick cloud of uncertainty over rate hike timings, but the three out of ten voting members dissenting has now  sparked discussions of December being a live meeting. December could be a possibility for a rate rise if US domestic data for Q4 displays signs of stability. Dollar sensitivity could be a recurrent theme ahead of December’s FOMC meeting as investors ponder on the Fed’s next move. From a technical standpoint, the Dollar Index is turning bearish on the daily timeframe as prices are trading below the daily 20 SMA while the MACD has crossed to the downside. A breakdown below 95.00 could encourage a further decline towards 94.00.

WTI Oil buoyed by Dollar weakness

WTI Oil has traded to fresh weekly highs at $46.31 and this has nothing to do with an improved sentiment towards Oil, but is due to Dollar weakness from the Federal Reserve’s decision to keep US rates unchanged. This commodity remains dogged by the oversupply woes while fading optimism over OPEC’s informal meeting concluding successfully has capped most upside gains. Prices may be experiencing a technical rebound with the $47 regions acting as a strong resistance which could entice sellers to attack. The countdown begins as the informal OPEC meeting looms and if investors are left empty handed once again then bears could be gifted the opportunity to drag prices lower.

Commodity spotlight – Gold

Gold received a welcome boost on Wednesday with prices lurching towards $1337 following the Federal Reserve’s decision to keeping rates unchanged. Prices were elevated further as Dollar’s weakness provided a solid foundation for bulls to install repeated rounds of buying. With risk aversion still rife and uncertainty still lingering, Gold could be poised for higher inclines in the future. From a technical standpoint, prices are trading above the daily 20 SMA while the MACD has also crossed to the upside. Previous resistance around $1330 could transform into a dynamic support which opens a path higher towards $1350.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.


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About Louie Lewis

Louie Lewis
Successful forex trading starts with you first. Then comes the actual strategies and techniques. I have been involved with forex and forex trading for a few years now. It is a wonderful way to build wealth. The learning never stops and I want to help others along their journey into this wonderful market of opportunity.

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