“We do think our policy,” asserts the Fed chairman on Wednesday, “is appropriate right now. We don’t see a strong case for moving in either direction.” Based on this stance, the Fed held the US policy rate unchanged in the latest FOMC meeting.
Equities’ reaction were generally muted. Some stock extended their advances; some slipped. A stronger reaction is noted in the precious metals sector, where Silver broken new 2019 lows (see below) while Platinum saw the $880 support melt away. The latest downward dynamic suggests that the directional risk has tilted towards the downside for precious metals.
In the FX market, Dollar’s strength abated. For example, against GBP the rate has rebound back above 1.300 while the EURUSD is trading at 1.120, a step higher than its recent lows. A counter-trend reaction to their medium-term downtrends.
In the UK, Footsie’s decline beneath the short-term support at 7,400 recently may have completed a short-term top formation (see Featured Chart). This breakdown raises the possibility of a further decline into 7,200.
Overall, is the financial market near an inflection point – whereby current trends are running out of momentum and vulnerable to a reversal? Possibly. So some defensive measures may be taken, e.g. long bonds and volatility, in case volatility surges.
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Jackson has over 15 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world largest institutions and hedge funds.
Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University.