Risk warning: Trading CFDs and FX is risky and if you are a professional client, losses can exceed deposits. Pepperstone Financial Services (DIFC) Limited is regulated by the DFSA. Arranging for Pepperstone Group Limited, AFSL 414530, the product issuer.

FED

10 trading considerations ahead of the FOMC meeting

Chris Weston
Chris Weston
Head of Research
Jun 15, 2021
Ahead of the big event I’ve listed a few trading considerations that I’ve picked up on the early scan.

For those who missed my FOMC preview yesterday, do take a look here.

1. Crude is in beast mode – new highs in this bull run, with the 3 October 2018 highs of $76.88 the clear target. Happy to stay long while price is holding the 5-day EMA.

2. For the equity traders – Exxon Mobile is moving with venom, having broken out to best levels since Jan 2020 and exerting real momentum.

3. Copper looks interesting – down 4% on the session and we see price breaking the recent range lows of $4.46. Buyers have supported at the Feb highs, but price is making lower lows and highs here – what is Dr Copper telling us about the global economy?

16_06_2021_D1.png


(Source: Tradingview)

4. US retail sales gained some attention in US trade with total May sales -1.3% vs the -0.8% consensus. No huge fallout from this data point as the April print was revised higher by net 1.5%.

    5. Another fundamental catalyst worth watching today is China May industrial production (consensus at 9% vs 9.8% in April), retail sales (13.6%), fixed asset investment (16.9%) and the NBS press conference– all at 5:00pm AEST.

    6. AUD was one of the weaker currencies on the session, specifically vs the CHF and EUR. The moves in industrial metals weighing, while we saw a weak tape in Chinese equities amid the PBOC draining liquidity. AUDCHF sits on the 3 June lows, so this FX cross is firmly on the radar. We do see divergence (Price vs RSI) on the daily suggesting a potential bullish reversal, but this is negated if price breaks down through 0.6896, then shorts look good for 0.6800.

    7. AUDUSD has its eyes on Aussie jobs tomorrow at 11:30am AEST – the pair has been one for the range traders of late and playing 0.7750 to 0.7650 has worked well since mid-April. Looking at rates pricing it's clear the market sees RBA and Fed policy settings in lockstep. That said, the Aus-US 10yr Treasury yield differential is breaking down with USTs wearing a yield premium (bullish for the USD).

      16_06_2021_D2.png

      (Source: Tradingview)

      8. USDCAD was a pair I had on the radar yesterday and is breaking out of the recent consolidation phase – hard to have a conviction on long USD exposures over the FOMC, but the set-up looks bullish.

      9. Gold trades heavy but holds the 4 June lows of 1856 – a close below 1856 puts the 200-day MA in play at 1841 ahead of 1825 to 1811 – obviously the FOMC will be key for Gold.

      10. A calm night in US equities – the US500 outperformed the US2000 and NAS100 found sellers, while other bourses were largely unnerved. Energy, industrial and utilities.

          Ready to trade?

          It's quick and easy to get started. Apply in minutes with our simple application process.

          Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information provided here, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.