US stocks hold firm ahead of FOMC meeting

Tuesday, June 17, 2014

Wall Street started the week on the front foot as benchmark indices edged higher, encouraged by positive data and building on Friday’s gains. The Empire manufacturing index surprised on the upside as it came in at 19.28 in June while industrial production accelerated 0.6% m/m in May from the previous month’s revised figure of -0.3%.  Both the S&P 500 and DJIA managed to end the session in positive territory, however, further gains were subdued as investors reacted with caution to the IMF’s revised US growth forecast which was cut from 2.8% to 2.0% for 2014 with particular emphasis on the weak start to the year. The dollar index experienced further downward pressure against major currency pairs, weakening for the fourth straight session yesterday as it closed below 80.50 which offered additional support to US markets.

Chinese equity indices shed much of Monday’s gain overnight after data released from the National Bureau of Statistics showed foreign direct investment (FDI) growth slowed considerably in May. Stocks reversed the previous session’s gains on the -6.7% y/y contraction in FDI in May, substantially missing expectations of a 3.2% y/y increase. Japanese stocks managed to post modest gains overnight as the generally positive sentiment from the US session carried over to Asian markets. The yen weakened slightly towards 101.80 after struggling to breach resistance at the 50 day MA yesterday with recent sessions largely dominated by sideways trading between support at the 200 day MA towards 101.60 and resistance at both the 50 and 100 day moving averages around 102.00-.20.

Spot gold prices slipped lower yesterday after early intraday moves tested resistance at both the 50 day and 200 day moving averages towards $1,285/oz. After rallying higher throughout the first half of June, bulls were unable to hold onto near term support at Friday’s close as prices tested support towards $1,270/oz. Prices this morning have slipped lower ahead of the FOMC meeting, last trading around $1,265/oz.

FDI in China slows markedly prompting a stock market sell-off

CNDIINVY Index China FDI Foreig 2014 06 17 07 39 16

Spot gold prices head lower after meeting resistance at $1,285/oz

XAU Curncy Gold Spot Oz 2014 06 17 07 55 13

Events for today

0930

UK

May

CPI & RPI

1000

DE

Jun

ZEW Economic Survey

1330

US

May

CPI Core

1330

US

May

Housing starts

1630

US

May

KC Fed

 

All times UK Local Time

Topics: US Fed, Gold, JPY, DXY
More from: Kash Kamal