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Sep 28, 2018

FEDERAL RESERVE HIKE RATES AND REMOVE THE WORD ACCOMMODATIVE

US HIKE INTEREST RATES

The US Federal Reserve increase rates by twenty-five basis points as widely expected this week, bringing the United States rate of interest to 2.25 per cent. The word accommodative was removed from the FOMC Policy Statement, with policymakers noting that they expected further gradual rate increases would be warranted while also mentioning that the United States economy remained strong. The initial market reaction saw the US Dollar Index fall on the Federal Reserve’s decision, although the greenback soon recovered and gained back lost ground against the euro currency.

  • The EURUSD pair is only bullish while trading above the 1.1650 level, key resistance is found at the 1.1750 and 1.1910 levels.

  • If the EURUSD pair trades below the 1.1650 level, key support is found at the 1.1600 and 1.1500 levels.

OIL PRICES SOAR

Oil prices moved sharply higher this week, with Brent Crude Oil moving to its highest level since 2014 while WTI oil edged towards the best levels of the year. Brent Crude Oil traded well above the $80.00 level on the back of tightening oil markets, while OPEC leaders also signalled that they would not immediately be boosting oil output. Tensions between the Trump administration and Iran were also helping to boost the price of Brent Crude and WTI Oil, as U.S. sanctions on Iran threatened to reduce supply by around one million barrels a day.

  • WTI Oil is bullish while trading above the $69.80 level, key resistance is located at the $73.80 and $75.00 levels.

  • If WTI Oil trades below the $69.80 level, price may decline towards the $69.00 and $68.30 levels.

ETHEREUM STRUGGLES

Ripple once again briefly overtook Ethereum as the second largest cryptocurrency by market capitalization this week, as the popular digital currency received more buying interest. Ripple added over seventy per cent to its market capitalization last week over bullish fundamentals, with Ripple bosses announcing technology that could challenge the SWIFT payment system. Ethereum failed to make any strong gains this week but did manage to finish behind Bitcoin as the second largest cryptocurrency.

  • The ETHUSD pair is bearish while trading below the $215.00 level, further losses towards the $183.00 and $157.00 levels seem possible.

  • If the ETHUSD pair trades above the $215.00 level, further gains towards the $240.00 and $2,555 resistance levels remains possible.

POUND MIXED

The British pound attempted to recover higher against the US dollar currency this week, after suffering its worst single one-day drubbing of the year at the end of last week over fresh Brexit no-deal concerns. The GBPUSD pair recovered above the 1.3200 level after starting the trading week under pressure, as British PM Theresa May vowed to push forward with her Chequers Plan and find an agreement with the European Union over the Northern Ireland border issue. Sterling soon gave back early week gains as the greenback firmed and reports surfaced that Theresa May was starting to lose backing from key members within the ruling Conservative party.

  • The GBPUSD pair is bearish while trading below the 1.3113 level, key support is found at the 1.3053 and 1.3000 levels.

  • If the GBPUSD pair trades above the 1.3113 level, further gains towards the 1.3170 and 1.3220 levels remains possible.

 

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