Gold Rallies, Asian Stocks Mixed

Federal Open Market Committee meeting is on focus today. Although traders expect the Fed to leave its short-term interest rate unchanged, the comments at the press conference by Chairman Jerome Powell will be closely watched. Far East markets finished mixed, Nikkei225 index in Tokyo shed 0.52 percent to 20,556, Shanghai Composite lost 0.72 percent to 2,575 while Hong Kong’s Hang Seng index gained 0.01% to 27,524. Australian stocks opened with a pop after a strong start from miners, just to finish 5 points higher to 5,877.

Crude oil rose 15 cents to $53.46/barrel while Brent added 21 cents to $61.42/barrel. Gold is making 8-month high at $1314. The 10-year treasury yield is flatlined at 2.717 percent, having dropped close to three basis points. The USDollar index is trading flat at 95.81.

On the Lookout: The FOMC rate decision is scheduled at 19:00 GMT. The central bank is widely expected to keep rates unchanged, and markets are likely to take cues from Chairman Jerome Powell’s press conference. Early morning Japan Consumer Confidence Index came in at 41.9, below expectations (42.5) in November. At 9:30 GMT we have the UK December mortgage approvals, consumer credit data, and at 10:00 GMT we have both the Eurozone January final consumer confidence, and the Eurozone January economic, business, industrial confidence.

The earnings calendar today includes McDonald’s Corp., Boeing Co, AT&T Inc. will report during European market hours, with numbers after the N.Y. close from Microsoft Corp., Qualcomm Inc., Tesla Inc., and Facebook.

Trading Perspective: In forex markets, USDJPY is trading flat at 109.35 and Aussie dollar is the outperformer as headline inflation figures came in slightly better than expected, adding 0.63 percent to 0.7201. USDCAD gives up 0.11% to 1.3254 while US Dollar gains 0.20 percent against Swiss Franc to 0.9961.

EURUSD Daily Chart

EURUSD bulls stopped at the 100-day average at 1.1450. The pair is trading 0.02% higher at 1.1336 in neutral mode. FOMC meeting later during US session and US-China trade negotiations which begins today are going to be the key economic events in forex for the day. The key support area is at 1.1290 the yearly low, and immediate support stands at 1.1411 yesterday’s low. On the upside, only a convincing break above 1.1450 can attract more buyers targeting 1.15.

In EUR futures markets, open interest shrunk for the second consecutive session on Tuesday, this time by around 2.5K contracts. Volume, instead, rose by nearly 11K contracts after two consecutive drops.

GBPUSD took a hit on the chin yesterday giving up 150 pips after failure to break above 1.32, as the UK Parliament rejected one of the most relevant amendment votes, the Cooper´s amendment got defeated by 298 to 321. PM May wants to renegotiate the backstop with the European Union, but Chancellor Merkel and the EU have already expressed their unwillingness to renegotiate the backstop agreement. The weekly high at 1.3214 is strong resistance while on the downside 1.3051 is the immediate support. All in all the pair remains vulnerable to Brexit news and traders have to be cautious entering any position.

Advanced figures for GBP futures markets noted investors trimmed their open interest positions by nearly 2.5K contracts on Tuesday vs. Monday’s final 209,156 contracts. On the other hand, volume increased sharply by almost 87K contracts.

XAUUSD is the talk of the town as the bulls keeps breaking higher making every day higher high. Currently, gold is making new 8-month high at 1315 — a level we haven’t seen since May 2018. Supply zone stands at 1350 the high from May 2018 while on the downside, yesterday’s low at 1302 will act as support and then 1275 is the key support figure at the weekly low.

XAUUSD Daily Chart