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Gold 2-week low before the Fed

“Diligence is the mother of good luck.” — Benjamin Franklin

 

 

HEADLINES

 

 

  • Dollar firms after a dip as markets weigh rate policies, coronavirus
  • Will an inflation-fighting Fed break its vow on jobs?
  • Oil drops toward $73, pressured by Omicron concerns
  • Gold settles at a nearly 2-week low ahead of this week’s Fed decision
  • Wall St tumbles on hot producer prices data as Fed meet looms
  • Fed dot plot to determine near-term direction in the US dollar – Goldman Sachs

 

 

FOREX

 

 

Dollar firms after a dip as markets weigh rate policies, coronavirus

 

The U.S. dollar was down slightly on Tuesday after coming back from a dip that nearly wiped out its gains from the day before as markets jostled with the different paths major central banks will choose to fight inflation and the pandemic's economic drag.

 

Will an inflation-fighting Fed break its vow on jobs?

 

With the Federal Reserve expected to soon adopt an inflation-fighting posture, it might seem at a glance as though the U.S. central bank will have to jettison its goal of broad and inclusive full employment barely a year after rolling it out.

The reality, though, is more nuanced than a simple either-or choice of reining in uncomfortably high inflation through a hike in the Fed’s overnight benchmark interest rate or fostering a return to full employment by holding it at the near-zero level.

 

 

COMMODITIES

 

 

Oil drops toward $73, pressured by Omicron concerns

 

Oil prices dropped toward $73 a barrel on Tuesday after the International Energy Agency (IEA) said the Omicron coronavirus variant is set to dent the global demand recovery.

U.S. data showing producer prices at 11-year highs confirmed market expectations of faster stimulus tapering to emerge from this week's Federal Reserve meeting, supporting the dollar and weighing on oil, which typically move inversely.

 

Gold settles at a nearly 2-week low ahead of this week’s Fed decision

 

Gold futures declined Tuesday, with prices marking their lowest finish in nearly two weeks.

Investors braced for the outcome of meetings among central bankers this week, headlined by the Federal Reserve, which could catalyze moves in precious metals.

The Fed will end its two-day, monetary-policy meeting on Wednesday and Chairman Jerome Powell said last month that the bank needed to shift its focus toward preventing rising inflation which has reached its highest level since 1982, by at least one measure.

 

 

STOCKS

 

 

Wall St tumbles on hot producer prices data as Fed meet looms

 

The S&P 500 and the Nasdaq fell more than 1% each on Tuesday after data showed producer prices increased more than expected in November and ahead of a potential decision on faster tapering from the U.S. Federal Reserve this week.

 

 

ANALYSIS

 

 

Fed dot plot to determine near-term direction in the US dollar – Goldman Sachs

 

“The currency's near-term direction will likely be determined by the Fed: if the "dot plot" at this week's FOMC meeting shows a two-hike median for 2022 we may see the recent weakness extend while a baseline of three or more hikes for 2022 would likely result in a return to USD appreciation.”

“Beyond this month, incoming inflation data will likely set the course for the Dollar.”

“There is a wide range of possible outcomes. In our baseline outlook—which envisions three Fed rate hikes next year alongside solid global growth—we see a range-bound USD vs EUR and most other G1Os, but decent gains vs USD for a number of EM crosses.”

 

 

CHART

 

 

US dollar / Canadian dollar – Daily Candlesticks

Source: GKFX Prime Metatrader 4

USD/CAD has rebounded from its brief dip at the start of December and is back testing major resistance at 1.285 to 1.30. - Prepared by Trading Writers*

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar


 

 

SOURCE

 

 

 

https://www.fxstreet.com/economic-calendar
https://www.fxstreet.com/news/fed-dot-plot-to-determine-near-term-direction-in-the-us-dollar-goldman-sachs-202112140154
https://www.reuters.com/markets/commodities/oil-prices-steady-demand-concerns-over-omicron-spread-2021-12-14/
https://www.reuters.com/markets/europe/dollar-firms-after-dip-markets-weigh-rate-policies-coronavirus-2021-12-14/
https://www.reuters.com/markets/europe/futures-edge-lower-fed-meet-looms-most-tech-stocks-slip-2021-12-14/
https://www.fxempire.com/news/article/will-an-inflation-fighting-fed-break-its-vow-on-jobs-839749

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