USD: Minutes from FOMC can be the highlight of a slow week
After a quiet start to the week, given the US public holiday on Monday and the New Year in China, the attention will return to US stimulus prospects and what the Fed is going to do about it. Before moving to a full voting week starting on 22 February, the stimulus package will still be in the committee process this coming week. The passing of the plan is seen as relatively smooth, implying that US equities remain supported by dips. As far as the Fed's response is concerned, Wednesday will see the publication of the FOMC minutes. There is a small risk of disturbance in the bond market if 'a few participants' wish to debate the acceptable timing of the removal of stimulus, but it seems obvious from Powell's statements that this is far too early to be addressed. January retail sales and industrial production should come on the strong side on the data front, maybe pushing the dollar to its highest levels from Wednesday to Thursday of the week. The frenzy of US retail investors should also come into view again. Thursday sees key GameStop volatility participants testify to the Financial Services Committee of the House.
‼ ️ At the end of last week's trading session, world gold price had 1 week of recovery after next week's sharp decline. The world gold price last week has sometimes bounced up to 1855, but this rise was not maintained until the end of the week. Closing the weekly candlestick with an upside-down candle at 1823. With the closing of the weekly candlestick being a bullish candle, in my opinion, this momentum will be maintained during the first few sessions of the day. this week.
- This increase, in my opinion, is also evident in the candle on Friday last week when the price dropped to 1810 but at the end of the session, it pulled back close to the opening price on the day, so on the daily candlestick. I also support an uptrend that I do subjectively evaluate on the weekly chart.
- Considering the smaller timeframe H4 we can see the price range we can establish a buy position around 1820. The closest target I think this precious metal can achieve is around the threshold. 1832 and the expectation are 1838-1840. This is the resistance zone of the gold during the day.
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Dow Jones, S&P 500 Forecast: Surge to Record Highs Running out of Steam
Equity markets drifted lower during the Asia-Pacific session on light volumes, as Chinese New Year celebrations curbed trade. Australia’s ASX 200 slipped 0.63% as Victoria, the nation’s second-most populous state, entered a snap 5-day lockdown due to an outbreak of coronavirus cases. Japan’s Nikkei 225 drifted 0.28% lower.
In FX markets, the haven-associated US Dollar and Japanese Yen gained ground, while the cyclically-sensitive Canadian Dollar and Norwegian Krone largely underperformed. Gold and silver prices slid marginally lower as yields on US 10-year Treasuries held steady at 1.16%. Looking ahead, UK GDP figures headline the economic docket alongside consumer sentiment out of the US.
US benchmark indices climbed to fresh record highs overnight, on the back of positive jobs data and the prospect of additional fiscal stimulus. However, price action suggests that a near-term pullback could be on the cards, as near all-time high price/earnings ratios suggest that valuations may be overstretched.
That being said, results for the latest earnings season have been relatively positive, with just over 74% of the 387 companies in the S&P 500 posting better-than-expected results. The impending delivery of a substantial fiscal support package may underpin stock prices, with House and Senate Democrats paving the way for President Biden to pass the majority of his proposed $1.9 trillion plan with a simple majority – in a process called reconciliation.
S&P 500 futures daily chart created using Tradingview
The formation of multiple Doji candles, alongside bearish RSI divergence, suggests that the S&P 500 may slip lower in the coming days.
A pullback to former support-turned-resistance at 3852, if sellers can successfully hurdle the 3900 marks and 8-day EMA (3883). Breaching that could open the door for the price to challenge confluent support at the uptrend extending from the March 2020 nadir and 55-EMA (3745).
However, bullish MA stacking, in tandem with the RSI hovering above 60, implies that an extended reversal lower is relatively unlikely.
Ultimately, a daily close above 3930 is needed to signal the resumption of the primary uptrend and pave the way for the index to probe the psychologically imposing 4000 marks.
