Markets Idling As FOMC Sits Behind Closed Doors

The yen popped in relation to the U.S. dollar today as it seems a given that the Federal Reserve will vote tomorrow to leave interest rates alone for the time being. The Japanese currency was up 1.00% in mid-afternoon trading.

However, as the trading session ended, the yen fell on some confusing reports that the Bank of Japan and the Japanese government were not in synch with the round of stimulus to be announced on Friday. 

If we were to make a guess, though, we would say that there will be an admonishment by the Fed that the economy is warm on the verge of hot. That is, at least concerning the key Fed data points that affect interest-rate decisions.

For most of the day, the euro was slightly stronger against the dollar but it was enough to help gold and silver to fall. At 3PM in New York, however, the buck is recovering ground it lost. The British pound is down a whisker.

Gold and silver were both up between 0,30% and 0.40%. The real surprise recently has been in the more exotic precious metals. Platinum and palladium were both higher today, platinum by about 0.90%, two to three times as strong as pricing in gold and silver were.

The thirty-day palladium chart shows it has risen roughly $130 and ounce. It has gone up about $200 in the last six months. That it started at a little less than $500 per ounce shows how strong the percentage gain has been.

U.S. equities were mired in the pre-Fed announcement trough. Commitment will have to wait till the Fed once again gives reassurances rates will stay stable.

Allegedly (according to some traders) around 11AM in New York, some sort of programmed trading sold off stocks in a major way. You can see that all three major indexes tumbled right around that time.

A closer look says that it doesn’t really matter. U.S. equities are consolidating after the recent run-ups and are awaiting the next signal in the markets to rise again. While the S&P hit resistance and fell back, the key test will be whether support at last week’s lows can be held.

Behind the technical snapshot is a resumption of optimism on Wall Street, an optimism that shrugged off Brexit as well as some spotty bad news in the economy and found a pot of gold at the end of a faint rainbow.

June’s labor report was a locomotive roaring down the track, retail sales boomed and new homes sales soared. While the raw numbers are impressive, the true impact of the data comes from those statistics exceeding expectations. Wall Street loves busting the ceiling of expectations even if the lower projections were the work of devoted pessimists.

The one, true bleak spot and another cause of a decline in stock prices today is the continued fall of oil. West Texas Intermediate fell half of one percent at settlement.

Two years ago this month, crude was selling at roughly $91.00 per barrel. Today it is hovering just below $43.00 pb. Across 2016, WTI crude is up a buck and a quarter.

How can it not be hurting stocks in some way if only as a significant head wind on an otherwise smooth sailing market?

Wishing you as always, good trading