As we settle into an incredibly important week for global markets there is likely to subdued start, and potential full run up to the big headline act of the week that is undoubtedly the FOMC rate decision on Wednesday night. That’s not to say that data is light in the days preceding the Fed, however with volume starting to slow there is likely to be a degree of caution ahead with traders not willing to take on too many large positions ahead of what is believed to be a 25 basis point hike in rates in the US.
Today’s session is set to be the quietest of the week data wise, so it could well be that the market has to take note from Friday’s payroll data. The reading was better than expected, so more or less nailed on a rate hike for Wednesday evening, even though the probability was already up at 98%. Of course these decisions are never definite until the announcement and one of the key variables for rates and bond markets is inflation. However it has been the case that the Fed have been unmoved by the sluggish rate of growth, however with the rate now sitting comfortably at the 2% mark there seems little concern.
With little out of the calendar today we will also have to focus on comments regarding Brexit from Brexit secretary David Davis, after comments he made over the weekend saying that he wants a Canada plus plus plus trade deal, meaning he wants no tariffs at all. The reference is to a free trade deal that Canada currently has with the EU, but Davis has also started he wants financial services included in the deal, something that Canada doesn’t have.
Again there is that feeling that the UK are putting out the rhetoric stating they will take no prisoners in the talks, and plan on leaving with everything they came looking for, very much like the divorce deal. However we know that the outcome of the divorce bill talks was that the UK backed down on all aspects and ended up paying their full allocation. The issue the government and David Davis now has is that the markets are losing faith in their ability to get a good deal.
XAU/USD Daily Chart
The gold price has been an interesting trade over the last few weeks after we broke below the longer term trendline that had been in place for the last 12 months. The move lower also saw a break out of the lower support level at 1260. The market now seems to be waiting for traders to take a view on longer term direction, as a small but expected retracement starts back towards the 1260 level.
Bitcoin
