Gold 2-week low before NFP

“I always define my risk, and I don’t have to worry about it.” – Tony Saliba

 

 

 

HEADLINES

 

 

 

• Dollar edges up as jolt from Fed minutes wanes
• Wall St focused on payrolls with Fed's 'full employment' brass ring within reach
• Gold slides to 2-week low on hawkish Fed signal, rising yields
• Oil extends rally on Kazakhstan unrest and Libyan outages
• S&P 500 ends choppy session nearly flat, a day after sell-off
• Fed will start ‘quantitative tightening’ this September – JP Morgan

 

 

 

FOREX

 

 

 

Dollar edges up as jolt from Fed minutes wanes

 

The U.S. dollar edged up on Thursday after a flurry of economic data, including weekly labor market numbers, in a more muted move a day after a spike higher following the release of minutes from the Federal Reserve's December meeting.

Traders are currently anticipating a greater than 70% chance for a rate hike of at least 25 basis points at the March Fed meeting, according to the CME FedWatch Tool.

 

Wall St focused on payrolls with Fed's 'full employment' brass ring within reach

 

Twenty months after a global health crisis hobbled the U.S. economy, recent data - along with a hawkish turn from the Federal Reserve - is implying the labor market is approaching a complete recovery from the pandemic.

That recovery has contradictory implications for the stock market. On the one hand, it could mean the labor drought, which has jacked up wages and cut in to profit margins, could be on the wane. Conversely, it could help hasten the Fed's timeline for hiking the Fed funds target rate, which could be a boon for interest rate-sensitive financials (.SPSY), but a headwind for sectors such as tech.

 

 

 

 

COMMODITIES

 

 

 

Gold slides to 2-week low on hawkish Fed signal, rising yields

 

Gold prices slid to a two-week low on Thursday, pressured by rallying U.S. Treasury yields after the Federal Reserve signalled quicker increases to interest rates. The Fed minutes released on Wednesday showed officials had discussed shrinking the central bank's overall asset holdings as well as raising rates sooner than expected to fight inflation. read more. Benchmark 10-year yields rose to their highest level since March last year.

 

Oil extends rally on Kazakhstan unrest and Libyan outages

 

Oil prices rose about 2% on Thursday, extending their new year's rally, on escalating unrest in OPEC+ oil producer Kazakhstan and supply outages in Libya. Russia sent paratroopers into Kazakhstan to help quell a countrywide uprising after deadly violence spread across the tightly controlled former Soviet state.

 

 

 

STOCKS

 

 

 

S&P 500 ends choppy session nearly flat, a day after sell-off

 

The S&P 500 ended a volatile session close to unchanged on Thursday, as technology shares fell but financials lent support a day after the market sold off on a hawkish slant in Federal Reserve minutes.

Banks were among top performers among financials, with the S&P 500 bank index up 2.6% following a rise in the benchmark U.S. 10-year Treasury yield , which touched its highest level since April 2021. Higher interest rates can increase profit margins for banks and financial firms.

 

 

 

ANALYSIS

 

 

 

Fed will start ‘quantitative tightening’ this September – JP Morgan

 

“We think the Fed will start ‘quantitative tightening’ this September by allowing maturing assets to run off its balance sheet,” said JP Morgan. The bank adds, “We expect the FOMC will phase in a $100bn-per-month cap on runoff... double the maximum pace its balance sheet was reduced during 2017 to 2019.”

 

 

 

CHART

 

 

 

Gold – 4-Hour Candlesticks

Source: GKFX Prime Metatrader 4

XAU/USD has broken down from a rising channel and below its 20 DMA in a failed breakout above resistance at 1815. - Prepared by Trading Writers*

 

 

 

CALENDAR

 

 

 

*Times in GMT

Source: FX Street Economic Calendar

 

 

SOURCE

 

 

 

https://www.fxstreet.com/economic-calendar
https://www.reuters.com/markets/europe/wall-st-focused-payrolls-with-feds-full-employment-brass-ring-within-reach-2022-01-06/
https://www.fxstreet.com/news/fed-will-start-quantitative-tightening-this-september-jp-morgan-202201060004
https://finance.yahoo.com/news/dollar-basks-fed-minutes-glow-094140460.html?.tsrc=fin-srch
https://www.cnbc.com/2022/01/06/gold-markets-federal-reserve-omicron-covid-variant.html