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FOMC hints at rate hikes
BY Janne Muta
|July 6, 2023The FOMC meeting minutes revealed yesterday that, several Federal Reserve policymakers hinted at potential rate hikes due to stronger-than-expected economic activity and no evidence of inflation coming down to the Fed's target. The Federal Open Market Committee maintained steady rates though, with Fed Chair Jerome Powell stating that further economic resilience might necessitate continued rate increases. The US inflation remains high, with core goods inflation and housing services inflation moderating slower than anticipated.
Equities remain weak as investors are fearing a new trade war between the US and China. The US Commerce Department has strongly opposed China's sudden imposition of export controls on gallium and germanium, vital for semiconductor and electronics production. The controls are likely to cause supply disruptions and price hikes in sectors like electric vehicles and fibre optic cables. China’s move comes after the US restricts chip exports to China.
Traders are closely watching US policymakers' actions and Treasury Secretary Janet Yellen's visit to China, amidst rising tensions between the countries. This could turn into a major trade war but it seems that the stakes are so high on both sides that the parties are likely to find common ground. Neither side can afford to grind their key industries to a halt. The key risk events today include the US reports on initial jobless claims, ADP employment, JOLTS job openings and ISM Services PMI.
DAX
DAX keeps breaking support levels and has created a lower swing high in the daily chart. This increases the probability of the next key support (15 700) breaking. In the 4h chart, the market remains bearish below 15 900. Above the level, the market could move to 16 020.
EURAUD
EURAUD is bearish below 1.6353. Above the level, the market could move to 1.6420. The market is trending lower in the 4h timeframe after creating a bearish weekly candle (shooting star) last week. If the last week’s low (1.6325) is violated decisively look for further weakness in this currency pair.
GBPNZD
GBPNZD is bearish below 2.0590. Above the level the market could move to 2.0645.
FedEx
FDX rallied strongly after the company reported earnings that exceeded analyst expectations last week. The market remains bullish above 237.90 with the nearest support level at 245.50. Below 237.90, look for a move to 228.
The next main risk events
- USD ADP Non-Farm Employment Change
- USD Unemployment Claims
- USD ISM Services PMI
- USD JOLTS Job Openings
- CHF Foreign Currency Reserves
- GBP BOE Gov Bailey Speaks
- CAD Employment Change
- CAD Unemployment Rate
- USD Average Hourly Earnings m/m
- USD Non-Farm Employment Change
- USD Unemployment Rate
- CAD Ivey PMI
- EUR ECB President Lagarde Speaks
For more information and details see the TIOmarkets economic calendar.
Trade Safe!
Janne Muta
Chief Market Analyst
TIOmarkets
Tio Markets UK Limited is a company registered in England and Wales under company number 06592025 and is authorized and regulated by the Financial Conduct Authority FRN: 488900
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. All trading involves risk.
DISCLAIMER: TIOmarkets offers exclusively consultancy-free service. The views expressed in this blog are our opinions only and made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances, or needs. The content has not been prepared in accordance with any legal requirements for financial analysis and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval.
Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.
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