10 trading considerations ahead of the FOMC meeting
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?
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).
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.