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Silver plunges from December highs to take on S1 as dollar rallies to 97 the figure post FOMC / Powell presser

  • Silver prices tumbled following a spike in the greenback due to a more hawkish than expected outcome from the FOMC meeting. 
  • March silver SIH9, +0.16%  added 11.7 cents, or 0.8%, to $14.818 an ounce. It trades around 4.2% higher month to date.

Spot silver prices fell heavily from the 14.80's to a low of 14.58, propelling the ATR to the highest levels in weeks. The price reversed the pre FOMC bid and moved down to challenge the pivot located at 14.64. As expected, the Federal Reserve hiked rates and the decisions to do so were unanimous between the committee's members. Rates were raised by 25 basis points to 2.25% - 2.50%. 

The Fed forecasted two hikes in 2019 in its statement, above where the street has priced which fulled a rally in the greenback. The DXY jumped from 96.61 to test 97 the figure.

  • Federal Reserve's FOMC statement - Dec. 19 - full text
  • FOMC raises the target for fed funds rate by 25bp to 2.25% - 2.5%

The Statement came with little new, repeating that risks to the economy appear 'roughly balanced' and will "continue to monitor economic and financial conditions for their effects on the economic outlook." However, there was also a boost to growth forecasts while inflation forecasts were little unchanged:

GDP forecasts:

2018 3.0% vs 3.1%
2019 2.3% vs 2.5% prior
2020 2.0% vs 1.8% prior

Inflation:

2018 1.9% vs 2.0% prior
2019 2.0 vs 2.1% prior
2020 2.0% vs 2.1% prior

 Jerome Powell's presser and key comments so far:

  • Monetary policy will be providing a smaller boost to the economy in 2019
  • Policy does not currently need to be restrictive
  • Policy at this point does not need to be accommodative
  •  We've reached bottom end of range of neutral rate

Silver levels

Silver has broken back below the pivot and targets a break of S1 located at 14.61. A trip down to 14.51 would equate to a full reversal of the 14th Dec near-term correction which confluence of the 1004hr SMA below S2 at 14.57. Bears can look to the double bottom lows and the 50% Fibo of the mid-Nov low to recent Dec highs at 14.36. If bulls regain control, eyes will focus on the Dec highs, at 14.84 made earlier today, exceeding the previous high for the month at 14.82. The 14.90's, in general, are the Aug and key resistance area.

  • Support levels: 14.60 14.57 14.50
  • Resistance levels: 14.71 14.84 14.90

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