BOE, SNB policy and Fed testimony in Key Focus. Where will the market go?

The U.S. dollar weakened against its major counterparts yesterday after Federal Reserve Chair Jerome Powell’s comments on the central bank’s ongoing fight to lower inflation failed to live up to the more hawkish market expectations.

Chair Powell on Wednesday told lawmakers that the fight against inflation still “has a long way to go” and despite a recent pause in rate hikes officials were in agreement borrowing costs would likely still need to move higher.

The Dollar Index, which tracks the greenback against a basket of six other currencies,  slipped from its day’s high of 102.7050 and traded at 102.13 down 0.39%.

Gold prices rebounded from the three-month low as the US Dollar lost momentum following comments from Federal Reserve (Fed) Chairman Jerome Powell. Prices dropped by 0.18% and settled at 58705, prices made a low of 58375. Silver prices extended their fall for the second day and plunged by 1.65%, after hitting a day’s low of 68554 settled at 69225.00.

Today, Gold futures having immediate support is seen at 58300-58150 and resistance is at 58920-59550.

Silver Future has resistance at 69950-70550-70950 and support at 69200-68550.00.

Base metals have rebounded from the day’s low and settled in a green. Copper futures settled at 732.30, bouncing from the day’s low of 724.55 up 0.21%. Zinc prices rebounded from 213.40 and settled at 217.25.

Technical Levels – Copper prices have immediate resistance at 734.20-738.50-743. On the downside, support will be 728.00-722.50.

Crude oil prices have paused their recent fall and recovered 2.28% yesterday.  Prices inch higher today’s high after some analysts predicted a drawdown in U.S. stockpiles and Federal Reserve Chair Jerome Powell reaffirmed the central bank’s fight to bring inflation down to its 2% target.

MCX crude oil settled at 5951, up by 2.22%.

Technical Levels – Crude oil has immediate resistance at 5955 above it 6050-6102.00. On the downside, support is seen at 5860-5810.00.

Economic data and events to watch

Swiss National Bank

At 1.00 pm – SNB Monetary Policy Assessment and SNB Policy Rate to release.  The forecast is to hike the rate by 1.75% from 1.50% previously.  

Above data could have a positive impact on the dollar.

U.K.

At 4.30 am – MPC Official Bank Rate Votes and Official Bank Rate will be released.  The forecast is to hike the bank rate by 4.75% from 4.50% previously, with inflation still more than four times above the central bank’s 2% medium-term inflation target.

All the above data could have a positive impact on the GBP.

Eurozone

At 5.35 pm: German Buba President Nagel Speaks.

At 7.30 pm – Consumer Confidence. Data is forecast to have a contraction of -17, unchanged from the previous.

The speech could have a negative impact on the Euro.

U.S.

At 6.00 pm – Unemployment Claims. Data is foreseen to reduce by 261k from 262k the previous week.

Current Account data release at the same time to release. Data is forecast to have a contraction of 214B from a contraction of 207B.

At 7.25 pm – FOMC Member Bowman Speaks

At 7.30 pm – Fed Chair Powell Testifies.

Existing Home Sales at the same time. Data is foreseen at 4.25M slightly lower from 4.28M.

CB Leading Index m/m is forecast to have a contraction of 0.8%  against a contraction of 0.6%.

At 8.00 pm – Natural Gas Storage. Data is forecast to increase by 89B from 84 B.

At 8.30 pm – Crude Oil Inventories. Data is forecast to reduce by 0.5M from 7.9M.