No surprise on the interest-rate decision by the FOMC this morning.
The health of the US jobs market and overseas risk factors are the two main concerns holding back the Fed’s pace of rate hiking.
Risk appetite, however, still remains cautious ahead of the BOJ meeting today and the Brexit vote next week. The S&P 500 index closed 0.18% lower at 2071.5 points. Gold and silver prices surged, suggesting that safe-haven assets are still a preferred choice right now.
China A-shares led the gains in Asian markets on Wednesday, in spite of the MSCI deciding to delay their inclusion. The Shanghai Composite erased early losses and closed 1.5% higher, led by small and mid-cap stocks. The Hang Seng Index ended 0.4% higher, with Tencent (700 HK), CCB (939 HK) and AIA (1299 HK) the top performers.
Yesterday’s rally is hard to believe, but more like a relief rebound after uncertainties were eliminated. The decision not to include China A-Shares will help to draw attention back to the fundamentals of the A-share market, because ultimately economic growth is the key factor to decide market performance.
The Dollar Index retraced to the 94.55 area as the FOMC kept its rate unchanged. USD/JPY has tested the key support level of 105.60 ahead of the BOJ announcement, due to a weaker dollar.
Traders are waiting for the interest-rate decision from the BOJ meeting today for a clearer outlook of the USD/JPY. EUR/USD rallied over 60 pips last night to the 1.1270 area, with immediate support and resistance levels at 1.1190 and 1.1400 respectively. USD/CNH has also retraced to the 6.5930 area after testing the recent high of 6.6130. The uptrend remains unchanged, with the immediate support level at the 6.5770 area.
Gold broke out above the $1,286 resistance and surged to $1,300 this morning due to strong demand for safety assets. Silver has also rallied to $17.74, getting closer to a key resistance level of $18.00.
A softened USD didn’t help to lift the price of oil, with WTI crude sliding further, to $47.58. The immediate support and resistance levels are at $46.60 and $49.60 respectively.
Gold - Cash
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Margaret Yang Yan