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    FX Consultant is offline Senior Member
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    Jun 2004

    Default 27th July 2017 - The US Treasuries yields reacted negatively to the FOMC's "relativel

    27th July 2017 - The US Treasuries yields reacted negatively to the FOMC's "relatively soon" Unanimously, the FOMC members have taken their decision to keep the Fed fund rate unchanged between 1% and 1.25% referring to relatively soon reduction of the Fed's balance sheet. Nearly all of the markets pundits have seen in this signal paving for the decision of unwinding next meeting on Sep. 19-20 to be enact starting from the third quarter of this year The Fed which refrained from giving a clearer message about its $4.5 trillion balance sheet has mentioned in its statement following last Jun. 15 meeting that it is currently expecting to begin implementing a balance sheet normalization program this year, as the economy evolves broadly as anticipated.
    The unwinding plan will start by $10 billion a month cap "$6 billion from Treasuries and $4 billion from mortgage-backed securities", before rising every 3 months by this same scale, until the caps amount reach $30 billion of US treasuries and $20 billion of MBS.
    The FOMC assured on the current low inflation pressure which made it in no rush to raise rates giving further boost to the labor market which did not aggregate enough wage inflationary pressure. The FOMC has mentioned this time that it will be monitor closely the inflation developments.
    After The FOMC underscored its appreciation of the current inflation pressure easing down in its released assessment following last June meeting, when it expected the inflation rate to continue to be in the short run below its 2% yearly inflation target, before stabilizing around this rate over the medium term as it targets.
    Last June the committee expected the inflation rate to be at 1.6% this year down from 1.9% it's expected in March, but it kept its forecast for 2018 and 2019 at 2% yearly.
    May US PCE broad figure and also core figure rose by only 1.4% year on year, while the Fed's target over the medium term is 2% yearly.
    The PCE is the Fed's Favorite inflation barometer and it is to be released about June next Tuesday.
    While the markets focusing will be next Friday on the release of Q2 GDP which is expected to show annualized growth by 2.6% after 1.4% expansion in the first quarter.
    The FOMC expected last June 2.2% annualized GDP growth rate this year from 2.1% it expected in March.
    UST 10YR yield retreated again below 2.30%, after rising last Tuesday to 2.35% level, as The US treasuries yields have reacted negatively to this new reference by the FOMC which pushed the greenback down across the broad raising the gold again above 1260$.
    While Dow Jones and S&P 500 could keep their existence close to their all time highs, after higher than expected earnings reports of the second quarter and amid energy prices rebounding could be extended to the beginning of last June levels.
    After deeper than expected falling of US EIA crude oil inventory in the week ending on Jul. 21 by 7.208m barrels to 483.415m suggesting that OPEC cut could start to take its toll on the inventories.

    After the downside wave from $1296.16 engulfed the previous falling from $1292.76 to $1214.28, the gold could rebound from its higher low at $1204.85 which came above last Mar. 10 bottom at $1194.98.
    The Gold could gather momentum to extend its creeping up to be traded now close to $1265, after getting over its daily SMA50, its daily SMA100 and daily SMA200, however it is still exposed to forming a lower high below $1296.16.
    XAUUSD daily Parabolic SAR (step 0.02, maximum 0.2) is reading today $1236.92 in its 12th day of being below the trading rate.
    XAUUSD daily RSI-14 is now referring to existence at a higher place inside its neutral area reading 63.941.
    XAUUSD daily Stochastic Oscillator (5, 3, 3) which is more sensitive to the volatility is having now its main line in its overbought region at 82.636 leading to the upside its signal line which is in the same territory at 81.225.

    Important levels: Daily SMA50 @ $1250.19, Daily SMA100 @ $1248.69 and Daily SMA200 @ $1229.92
    S1: $1204.85
    S2: $1194.98
    S3: $1180.75
    R1: $1296.16
    R2: $1337.31
    R3: $1367.25
    Have a good day
    Kind Regards
    Global Market Strategist
    Walid Salah El Din
    Mob: +20 12 2465 9143
    Last edited by FX Consultant; 07-27-2017 at 03:14 AM.

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