A further cut by the US Fed has thrown markets into confusion again. As I have pointed out previously, interest rates have risen in their market but obviously the pressure became too much. This was particularly the case after the previous session when the Fed completely lost control as the repo rate spiked. But….is this for real:
Jay Powell and the Federal Reserve Fail Again. No “guts,” no sense, no vision! A terrible communicator!
The rate cut came just in time for Wall Street which was initially weaker but rallied on the interest rate decision. Trading for the past few weeks is still enclosed in the rather ominous looking up-slanting wedge although I don’t rule out the possibility that they will make another attempt at the highs.
US dollar bounced on the news leaving some sharp falls in the crosses – including our dollar. Gold was initially hit by further selling and came back to its recent support once more but in later trading has scrambled back up off that dangerous looking area. The pattern looks like a horrid head and shoulders top but as pointed out yesterday, I am impressed that it has held so well. Also - another point to ponder – head and shoulders patterns are such a recognizable formation that at the moment the whole world is probably now seeing this pattern evolve. Usually when something is so identifiable, then the market will try to do something different. To see the way the gold price has once more bounced off the support and got back into its uptrend this morning, impresses me even more. I am beginning to think that if the Commercials couldn’t break the gold market on the interest rate decision then they may not be able to. If gold holds here and heads higher, then I think it will be signaling serious problems in the world. So, a few more stressful sessions coming up until this situation is cleared.
And I have something for everyone to have a good worry about today – iron ore and coal. I am not happy with the structure of the iron ore market again. Last time it reached this extreme, we had a big fall. So I think we are due for some more weakness. Add in the coal price – both steaming and coking, and we have a bit of a problem.
XJO has crawled all the way to 6700. A bit like the little train steaming up the hill – I think I can, I think I can. Worried what it will do when it gets to the top – the other side might not be pretty.
(20min delay)