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Fed Meeting Preview

Silver – Daily Candlesticks
Source: GKFX / MT4 (July 28, 2020)


XAG/USD has posted an unusual Japanese candlestick pattern – the long-legged doji. It represents a period of pause and often a transition to a new trading environment (in this case a consolidation or downtrend) after big short-term volatility.
 

TAKEAWAYS


•    Fed Rate decision today 2pm E.T
•    Gold and Silver backtrack in day of massive volatility 
•    4 Big Tech CEOS testify to House Antitrust Subcommittee    
•    DAY AHEAD: Aussie CPI, FOMC decision
 

MARKETS


December gold futures topped $2000 per oz – the first gold contract to ever hit that milestone. As they did, gold – alongside silver underwent a huge intraday slump and recovery as top-picking bears stepped in but bulls kept the faith. Spot gold reached a new high of $1981 per oz before sliding $60 then rebounding to finish in the green. The price of silver topped $26 per oz to reach a 7-year high before sliding 9% and then rebounding to finish little changed (see chart above).

In concert with the moves in metals markets, the US dollar stabilised after a multi-day losing streak in the run up to today’s Fed meeting. The euro snapped a seven-day winning streak while the pound fared better with GBP/USD closing above 1.29.

Tech stocks pulled Wall Street lower in the run up to testimony from tech CEOs to Congress today and earnings on Thursday. European shares closed higher on hopes for new coronavirus vaccines. Shares in Asia were on the rise with the new Hong Kong tech index creating some buzz.
 

GURU WISDOM

“Money, if it does not bring you happiness, will at least help you be miserable in comfort.”  – Helen Gurley Brown
 

Fed Meeting


It is probably fair to say expectations have been leaning pretty dovish going into this meeting given the weakness in the USD. The question then becomes- has a dovish Fed been priced into forex markets already? Consensus is that the Fed keeps policy unchanged with dovish rhetoric, which by itself could see some dollar short-covering. However, since the dollar has been falling on expectation of minimal change from the Fed, the bar seems quite low for the Fed to give a dovish surprise and send the dollar down once more. 
 

Tech CEOs


In what could be an occasion to get the popcorn out, the CEOs of Apple, Alphabet, Amazon and Facebook will be grilled by Congress about the anti-competitive behaviour of their companies. 

Tech stocks have been underperforming in the last week - and with earnings out the next day - comments from the chief executives could carry extra weight. We think Facebook and Google-parent Alphabet are most exposed because of the increasing ire from Republicans about the censorship of right wing voices on YouTube and social media. It’s also the first such hearing for Jeff Bezos, the richest man in the world and founder of Amazon.