Weekly Outlook: Market players likely to liquidate, consolidate holdings

September 21, 2024 (MLN): The Federal Reserve has gone ahead with a 50 basis point reduction in interest rates. 

In anticipation of an economic downturn, it lowered future employment prospects and lowers inflation forecasts. Consequently, the interest rate projection is also reduced as well. 

Following a long wait and after the Federal Reserve's decision on interest rates. The Bank of England has chosen to maintain its current policy stance, preferring greater caution and a hawkish tone from its Monetary Policy Committee members. 

The Bank of Japan did not indicate any guidance regarding interest rates. It said that inflation is expected to rise in the forthcoming months, and it will alter its rates in response to inflationary pressures. 

With all significant events concluded, this week, despite a variety of US economic data, investors may take a pause. Upcoming economic data includes the S&P Flash PMI, US Consumer Confidence, US New Home Sales, Durable Goods report, Final Q3 GDP, weekly unemployment claims, and US pending home sales. 

Nevertheless, atention will be focused on the release of the core Personal Consumption Expenditures Index (PCE) on Friday, a crucial inflation indicator for the Federal Reserve.

This week, I anticipate that market players will choose to liquidate and consolidate their holdings.

#GOLD at $ 2621.80 - In line with my projection. It is approaching the peak at near $ 2635-40 levels. A break below $ 2595 leads to a test and a possible break of $ 2583. Otherwise, $2665-70.

#EURO at 1.1160 can struggle  to attaining 1.1250 levels. Looking for a break of 1.1080-90 to test 1.1040 zones.

#GBP at 1.3317 - Pound Sterling has risen in line with my projection from last week. It will continue to find buyers on dips around 1.3210-30 range. However, unless it surpasses 1.3410-30, there is a significant likelihood of a correction. Or else watch 1.3140 if it dips.

#JPY at 143.86 - As anticipated, the support level of 139.10 was well protected, reaching the target of 143.90. This week, USD could see further gains, but it should hold 142.20 levels. However, the US Dollar must surpass the resistance level of 144.90 to test 145.85, which may prove tough. Or else watch for 141.50 levels.

The writer is the former Country Treasurer of Chase Manhattan Bank

Disclaimer: The views and analysis in this article are the opinions of the author and are for informational purposes only. It is not intended to be financial or investment advice and should not be the basis for making financial decisions.