Federal Reserve Will be Patient About Raising Interest Rates

Asian markets finished higher after Chairman Jerome Powell reiterated that Federal Reserve would be patient about raising interest rates, Japan’s Nikkei 225 index gained 0.7%, Hong Kong’s Hang Seng rose 0.1%, the Shanghai Composite index also advanced 0.1%, Australian stocks eased by 0.3%, slipping for the first time in five sessions despite encouraging retail trade data. US Treasury Secretary Steven Mnuchin told reporters that Chinese Vice Premier Liu would most likely visit the US later this month for higher-level trade negotiations. Moreover, Mnuchin’s comments seem to have bolstered hopes of a breakthrough trade deal.

European stock indices started the session mixed, DAX is trading 0.10% higher at 10,927 while CAC40 in Paris advances 0.15% at 4812 and FTSE in London advances 0.18% at 6974. UK manufacturing and industrial production figures are due at 0930 GMT, along with the trade balance and gross domestic product for November.

On the Lookout:  Australian retail sales expanded by 0.4% in November to be 2.8% above the level of a year ago while the annual figure is distorted lower by unfavourable base effects (sales jumped 1.2% last November followed by a sharp 0.5% decline in December).

Economic data is limited to December inflation figures out of the U.S that will provide some direction for USD.

Next week, data on consumer confidence and housing finance will be in focus locally on the economic front. Across the region, China international trade figures will receive attention on Monday considering its tensions with the US.

federalTrading Perspective: GOLD yesterday declined by 0.51 percent to close at $ 1286.3 after spending more of the day above 1290. Stronger USD pushed yellow metal prices lower. In the Asian session, the precious metal climbed to $1291 heading for a fourth consecutive weekly gain. Immediate resistance for gold is yesterday’s high at 1293.95 and then previous week high at 1298.42. On the downside, yesterday’s low has become first support and is closely followed by previous week low at 1276. In their latest gold-price forecast report, the US Goldman Sachs made upward revisions to their 12-month price outlook to $1245.

federalEURUSD profit-taking yesterday corrected the prices from daily high at 1.1570 to the round support at 1.15. Momentum is positive for the pair today with modest gains around 1.1530. FED Chairman, Jerome Powell further confirmed a slowdown in the rate hike in 2019 which might restrict the upside for USD. I don’t expect any major move today as the pair has to digest the release of the FED and ECB monetary policy meeting minutes. The first hurdle for the single currency is yesterday’s top at 1.1571, while a break above could force prices to June 2018 swing high at 1.1620. On the downside, the yesterday’s low at 1.1485 will act as immediate support, and more solid support can be found at the previous weekly low at 1.1309.