FOMC minutes calm the nerves

Jeffrey Halley

The overnight FOMC minutes calmed down some nerves and temporarily signaled a few more 50bps rate hikes in June and July before pausing in September. The dreaded 75bps hike threat was off the agenda, and recent US data, especially the slowdown in the housing market, was sufficient to spur certain bailout rallies in US equities and the US dollar.

Again, it leads to a non-uniform reaction by the Asian market thanks to the Chinese nerves.

Shanghai appears to be moving out of the Zero-COVID policy at a faster pace, but China’s Prime Minister Lee warned of economic headwinds and, in some respects, that the economy is much worse than it was in 2020.

As expected, the Bank of Korea raised its policy rate by 0.25% on Thursday morning. Neither Kospi nor Korean Won was affected, suggesting that this move is properly priced by the market.

Governor Ol of the Reserve Bank of New Zealand also testified in front of the Parliamentary Commission on Thursday. Adrian Or is a hawk and suggested that the policy rate needs to continue to be raised over the long term. Control inflation..

It’s a shame he didn’t think it was the same nine months ago when interest rates were zero and he was quantitatively easing to an apparently overheated economy.

Again, the New Zealand dollar has been barely responsive and below highs since Wednesday’s 0.50% rate hike. This means it’s about the US dollar, not the New Zealand dollar. Either the market is worried that New Zealand is heading into recession.

Data for Australia on Thursday morning were mixed.

Building capital spending QoQ fell 1.70% in the first quarter, while plant machinery spending increased 1.20% over the same period. To some extent, the old news is that the market is focused on the RBA’s policy trajectory, the new government’s fiscal policy, and whether the housing market employment begins to crack.

Singapore announced industrial production on Thursday afternoon in April and is expected to slow to 3.40% year-on-year in April. Softening numbers raise concerns about a slowdown in city-states and put pressure on local stocks. Thailand’s trade balance should continue to show a post-covid rebound as its border reopens for tourism.

Europe closed

There are many holidays in Europe on Thursday for Ascension Day. As with all of Scandinavia, heavyweight Germany and France are closed.

In the United States, pending home sales are carefully monitored, given the recent weaknesses in existing and new home sales. This obscures the second estimate of GDP in the first quarter and the first unemployed bill.

Another ugly number is Recession words Back on Wall Street’s lips, I could see another rush to the exit. Soft results from Gap and Dollar Tree can reinforce that emotion.

Overall, Thursday looks like the financial markets are waiting for new input and will be the day of integration ahead of Friday night’s personal income and spending data in the United States.

The UK market is waiting for details on the government’s storm tax on energy companies.

Mixed days of Asian stocks

Wall Street bounced overnight and the FOMC minutes weren’t terrifyingly flashy. In the relief rally, the S & P 500 was up 0.95%, the Nasduck was up 1.51% and the Dow Jones were up 0.60%.

In Asia, normal trends have moved away from the main session and US futures have eased slightly. S & P futures are down 0.15%, Nasdaq futures are down 0.40% and Dow futures are unchanged.

The Nikkei Stock Average in Japan is 0.25% lower and the Kospi in South Korea is 0.20% higher. Taipei was down 0.30%, while Singapore was up 0.90% on Thursday. This is because local investors have invested in big banks and real estate tycoons. Kuala Lumpur is only 0.15% higher, Bangkok is up 0.55% and Manila is up 0.25%.

The Australian market is mixed. All Ordinaries have decreased by 0.30%, but the ASX200 has not changed.

Oil market falls asleep

Crude oil prices barely rose from the previous day, creating another coma. Nonetheless, both Brent crude and WTI have maintained all recent rises, suggesting that the weaker side is the price hike so far.

China’s slowdown concerns have receded in the minds of traders, but so far, concerns have been centered around a tighter US diesel market and have not been ruled out. Export control There is an international market that is not nervous, and of course it is. The global data calendar is fairly light, so we expect prices to remain strong for the rest of the week.

Brent crude rose 0.60% overnight to $ 114.35, remaining in a similarly quiet Asian session. WTI rose 0.40% to $ 110.70 and rose only 20 cents to $ 110.90 in Asia.

Brent crude resistance is $ 115.00 and $ 116.00, and support is $ 112.00. Rally up to $ 116.00 can set up a retest test for my mid-term resistance at 120.00.

WTI takes comfort from the White House stance and sits in the range of 108.00 to 112.00 barrels. Nonetheless, Brent’s topside breakout also drags WTI high, allowing testing of the resistance zone from $ 115.00 to $ 116.00.

Money weakens

Gold fell 0.70% overnight to $ 1853.25 an ounce, and further fell 0.45% to $ 1845.00 in Asia.

A real test of the underlying strength of gold is to maintain profits in the face of a rise in the US dollar. The fall in gold over the last 24 hours in the face of a modest appreciation of the US dollar does not confidently satisfy me. Further appreciation of the US dollar could see gold face one of its ugly downsides.

Gold has nearby support at $ 1842.00, followed by $ 1863.00. Failure sees the possibility of a mini surrender by Long, which can reach $ 1780.00. On the top side, gold resistance is $ 1870.00, followed by $ 1886.00, a 100-day moving average.


Jeffrey Halley is a Senior Market Analyst at Asia Pacific. OANDA

Opinions are those of the author and not necessarily those of OANDA Global Corporation or its affiliates, subsidiaries, officers or directors. Leveraged trading is risky and not suitable for everyone. Losses can exceed investments.

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