US Stocks Edge Higher Ahead of Fed Minutes – S&P up 0.1%
US equity markets closed marginally higher overnight, supported by a rebound in technology stocks following recent declines. The Dow Jones rose 0.07% to 49,533, the S&P 500 gained 0.10% to finish at 6,843, while the Nasdaq outperformed modestly, advancing 0.14% to close at 22,578. In fixed income markets, yields pushed higher after the prior session’s pullback. The US 2-year Treasury yield rose 2.5 basis points to 3.432%, while the 10-year yield added 0.9 basis points to 4.058%. The US dollar also edged higher, with the DXY up 0.04% to 97.13. Commodity markets were notably weaker following reports of progress in talks between the United States and Iran. Brent crude declined 1.85% to $67.38 per barrel, while WTI fell 0.95% to $62.29. Gold came under heavier pressure, dropping 2.28% to $4,877.89, as safe-haven demand eased.
Gold Traders Moving Back to Fundamentals
Gold pulled back hard in trading yesterday after news hit the markets that progress was being made in high-level talks between the US and Iran. Given the recent volatility that we have experienced in the world’s favourite metal, with moves that have clearly been dominated by flow from various sectors, for some traders it was a refreshing return to fundamentals for intra-day markets. It made sense – lower geopolitical risk – lower gold, whereas in recent months we have seen a relentless move northwards no matter what updates we received on the newswires. No one is calling a return to normality in the short term, especially with Chinese markets notably closed; however, traders will now be looking to see if the gold-haven trade is back on, or whether we will see volatility increase again in the coming days and weeks. Initial support now sits at the recent low at $4,654.29 and lower on trendline support at $4,505.50, while short-term resistance is now on the trendline, currently around $4,960.00.
Busy Calendar Day Ahead for Traders
Attention now turns to a busy global calendar, with central bank developments and key data releases expected to drive volatility across sessions. The Asian session has a heavy antipodean focus, with Australian Wage Price Index data (exp +0.8% q/q) due out shortly before the RBNZ’s latest interest rate decision, where they are expected to keep rates on hold at 2.25%. UK data is again in focus on the London open, with the crucial CPI data (exp +3.0% y/y) due out. Sterling traders are expecting plenty of volatility around the event after the close vote at the last Bank of England meeting. The US session sees Durable Goods (exp -1.8% m/m) and Core Durable Goods (exp +0.3% m/m) data out early in the day before a long wait until the big release of the latest FOMC Meeting Minutes close to the closing bell.
