FOMC minutes due out today

The main event of the day is the FOMC’s September meeting minutes which are set to be released today.

MORNING OVERVIEW

We’re looking forward to the release of the FOMC’s last meeting minutes, in order to gain insight into the Fed’s deliberations in their meeting in which they hiked by 25 basis points.

MARKET SNAPSHOT

KEY MARKET THEMES

01 — FOMC September meeting minutes due out today

The Fed’s latest meeting minutes are set to be released during today’s American trading session. The minutes will offer insight into the Fed’s internal deliberations and the reasoning behind the bank’s 25 basis point rate hike. As such, market participants may be looking for clues as to how the dynamics behind the decision were shaped, including the degree of consensus among committee members and any signals on the path for future policy. Thus an implication of further rate hikes could support the greenback and vice versa. However, we should note that following the softer-than-expected inflation print and the implications of a loosening labour market, a hawkish tone may not heavily influence the market’s expectations of the Fed’s next decision.

Market implication (USD): N/A

02 — Houthi Rebel’s continue their attacks

Houthi Rebel’s have continued their attacks, with Reuters reporting that the rebel’s have attacked the Aden airport as tensions between the rebels and the Government forces continue to escalate. According to the report by Reuters “Houthis attacked the international airport in the southern Yemeni town of Aden with ballistic ​missiles and explosive-laden drones early on Wednesday, Yemen’s Transport Ministry said, as fighting intensified across several fronts between the ‌Iran-aligned group and Saudi-backed government forces”. The escalation of tensions in the region could provide support for oil prices should the supply chain be placed at risk.

Market implication (OIL): Bullish

03 — UK House Prices Flat in September as Lloyds Flags Resilient but Cautious Market

UK house prices were flat year-on-year in September, per the Lloyds House Price Index, following a 0.4% decline in August. Monthly prices also held steady, missing forecasts for a 0.2% rise, with the average property now at £298,441. Lloyds noted resilience despite high mortgage rates, with buyer enquiries at their highest since February. Regionally, Northern Ireland (7.4%) and Scotland (3.4%) led gains, while Greater London (-2.2%) lagged. The softer-than-expected reading, paired with signs of steadying demand, points to a mixed picture for GBP — resilience in enquiries could offer some support, but the miss on monthly prices may cap upside, leaving the pound likely to take more direction from other data this week.

Market implication (GBP) : N/A

WHAT MATTERS TODAY

FOMC September meeting minutes released

Time (GMT+2): 21:00

Expected: N/A
Previous: N/A

Potential market reaction:
N/A

EIA Weekly crude oil inventories figure

Time (GMT+2): 17:50

Expected: -2.341m
Previous: -2.251m

Potential market reaction:
Could support oil prices

ASSET FOCUS

[Gold / Commodities]

XAU/USD appears to be moving in a downwards fashion. We opt for a bearish outlook  for the bullion’s price. Supporting our case is the RSI indicator below our chart which currently registers a figure below 40 implying a strong bearish market sentiment, in addition to the MACD indicator below our chart. For our bearish outlook to continue we would require a break below our 4080 (S1) support level, with the next possible target for the bears being our 3945 (S2) support line. On the other hand, for a bullish outlook we would require a clear break above our 4200 (R1) resistance line with the next possible target for the bulls being our 4350 (R2) resistance level. Lastly, for a sideways bias we would require gold’s price to remain confined between our 4080 (S1) support level and our 4200 (R1) resistance line.

KEY LEVELS

• Resistance (R1): 4200
• Resistance (R2): 4350
• Support (S1): 4080
• Support (S2): 3945

Technical View: Bearish

CROSS-ASSET VIEW

TRADING SPHERE VIEW

Neutral for OIL

Our base case:
G7 and the Yemen’s Governments actions could alleviate concerns about oil supply and possible disruptions by the rebel’s which may weigh on oil prices. Yet recently tensions have flared up which could support oil prices.

What would change our view:
Strikes on oil refineries and oil pipelines

RISKS TO THE VIEW

US-Iran escalation

Should the US and Iran trade blows it may aid oil prices.

TODAY’S WATCHLIST

01 FOMC minutes

02 EIA weekly crude oil inventories figure