US Dollar, Crude Oil, Fed, AUD/USD – Talking Points
- The US Dollar is finding traction ahead of the Fed decision today
- Crude oil has struggled to gain support despite a Russian squeeze on energy
- All eyes are on the Fed today, Will a hike clear the way for a higher USD?
The US Dollar softened slightly in the Asian session today after the USD (DXY) index rallied 0.68% into the New York close.
The market is well prepared for a 75- basis point (bp) hike from the Federal Reserve after their Federal Open Market Committee (FOMC) meeting later today.
Anything other than a 75 bp shift in policy could see volatility rock markets. If they deliver on that, the focus for markets will be on the commentary from Fed Chair Jerome Powell.
His previous comments have highlighted that he believes that the main risk is from not controlling inflation, rather than the consequences of a recession. Treasury yields are unchanged so far today.
Meanwhile the supply of energy from Russia to Germany continues to weigh on the Euro with heightened uncertainty on future availability of natural gas ahead of the northern winter.
The squeeze on energy markets failed to boost crude oil with the WTI futures contract hovering around US$ 95 bbl and the Brent contract steady near US$ 104.40 bbl.
The American Petroleum Institute reported that crude stockpiles fell by 4 million barrels last week. Markets will be watching Energy Information Administration data later today for verification.
Australian headline CPI released today was a small miss at 6.1% year-on-year and has been interpreted as allowing the RBA to shy away from jumbo hikes. The Australian Dollar and domestic bond yields went lower.
Hong Kong’s Hang Seng Index (HSI) followed wall Street lower, but the rest of APAC equities were little changed. US futures are pointing toward a positive start to their cash session.
The gold price is a touch lower on the stronger dollar, oscillating around US$ 1,715 an ounce so far today.
The full economic calendar can be viewed here.
WTI Crude Oil Technical Analysis
WTI crude oil is approaching the levels seen prior to the outbreak of the Ukraine. Momentum may have rolled over to bearish with the 55- and 100-day simple moving averages (SMA) rolling over to negative gradients.
Support could be at the break point of 92.93 or the previous lows of 90.56 and 90.06. On the topside, resistance might be offered at the recent highs of 100.99 and 105.24.
— Written by Daniel McCarthy, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter
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