In the USA we saw the S&P 500 and DJIA post fresh record highs as traders continue to jump on board the equity train. The sentiment was not carried over to Asia, where we saw largely flat trading. The ASX 200 gained 0.8%, while the Nikkei 225 managed gains of 0.2%. China saw both major indexes close in the red, with the Hang Seng losing 0.2%, while the Shanghai Comp shed 0.6%.
In FX, the USD lost some ground in recent trade, specifically against the GBP, which has posted an impressive gain of over 150 pips as we see the 1.2800 resistance level being tested. The EURUSD popped above 1.1200 and we are seeing steady trading ahead of today’s big data releases out of the USA. The USDJPY, is tightly coiled with 110.00 the key level in the battle as we see all three daily, weekly and monthly pivots come into play.
In commodities, gold managed a move higher, as 1270 comes under attack after a base was formed just below the 1260 support level. Gold will react to geopolitical issues and the value of the USD. An increase in global tensions or a weakening of the USD, will see 1300 back in play, while stable geopolitical climate or a stronger USD, will see the 1250 support level come under fire.
Crude oil is looking heavy as bears hug the $46 mark ahead of the Crud inventory data out of the USA. A higher build will see $45 in the firing range while a lower number than expected will see a potential run on $50.
Today’s big mover will likely come from the USA, in the form of the Federal Funds Rate which is expected to be increased to 1.25% from 1.0%. Markets have all but priced in the expected rate hike and should the Fed increase the rates as expected, we would see some strength come into the USD as the last-minute adopters jump on board. If the Fed elects to increase rates by more than 0.25%, we would see a more aggressive buy of the USD while if they leave the rates unchanged at 1.0%, we would see a vicious sell off in the USD which would see gold and equities soar.