Mohicans markets：Focus on Fed Decision This Week

At 1 am the next day, European Central Bank President Lagarde will speak after Lagarde said that the European Central Bank may raise interest rates at more than two meetings.

Global View - Mainstream Market

On Monday, spot gold fell sharply after failing to challenge the 1680 mark in the Asian session, and fell about $20 at one point, then recovered some of the lost ground and turned up, and finally closed up 0.05% at $1675.92 per ounce; Spot silver finally closed down 0.32% at $19.56 an ounce.

The U.S. dollar index failed to stand above the 110 mark, giving up all previous gains during the U.S. session, and finally closed down 0.05% at 109.58; The yield on the 10-year U.S. Treasury bond rose first and then fell, rising above 3.50% for the first time since 2011, and finally closed at 3.49%.

In terms of crude oil, the two oil prices were on a roller coaster ride, falling more than 3% during the session. WTI crude oil began to decline in European trading, and once fell to a low of $82.07/barrel, then rebounded sharply, and finally closed up 0.11% at $87.61/barrel; Brent crude settled up 0.19% at $91.70 a barrel.

The Dow closed up 0.64%, the S&P 500 closed up 0.69%, and the Nasdaq closed up 0.76%. New energy auto stocks rose in general. Xiaopeng Motors rose more than 7%, Weilai rose 3.65%, and Li Auto rose 4.65%.  

European stocks were mixed. Germany's DAX closed up 0.49% at 12,803.24 points; the Euro Stoxx 50 closed down 0.03% at 3,499.49 points. The UK stock market was closed for one day yesterday.

Precious Metals and Energy Market Related Information

Precious Metals

Beijing time, September 20, on Tuesday, the trading day pays attention to the US real estate market data, Canadian CPI data, European Central Bank President Lagarde's speech, and pay attention to news related to the geopolitical situation.

Fundamentals are mostly bullish

[Ukraine advances further into liberated areas, pro-Russian separatists call for emergency referendum]

[European Union countries take precautions to survive the energy crisis this winter]

[Bundesbank says German economy will shrink through winter as gas supplies dwindle]

[The NAHB housing market index in the United States fell to 46 in September, which was lower than expected and fell for the ninth consecutive month]

[“New Fed News Agency” weakens expectations of a 100 basis point rate hike this week]

Fundamentals are mostly bearish

[Bank for International Settlements urges major economies to raise interest rates “forcefully”]

[Goldman Sachs: Fed is not expected to cut rates before 2024]

[U.S. Treasury yields hit the highest since 2011, and the Fed is expected to raise interest rates sharply again]

[The U.S. dollar fluctuates at a high level, and the market expects the Fed to increase sharply again]

[Survey: Norges Bank is expected to raise interest rates by 50 basis points this week, and interest rates will hit the highest level since 2011]

Crude Oil

On Tuesday, September 20, Beijing time, please notice that due to the impact of the shift for the month, on Wednesday NYMEX New York crude oil October futures complete the last trading on the floor at 2:30 on September 21, and complete the last trading on the electronic market at 5:00 am. Please pay attention to the trading venue expiration for the month change announcement to control the risk.

In addition, the U.S. oil contract expiration time on some trading platforms is usually one day earlier than the official NYMEX, please pay more attention; API data will be announced  at 4:30 on Wednesday.

Bullish factors affecting oil prices

[Survey shows that the U.S. crude oil prices between $80-100 per barrel next year]

[Russian oil production will be difficult to be replaced]

[U.S. stocks close higher, and please concerned about the Feds September rate hike and follow-up actions]

Bearish factors affecting oil prices

[Saudi Arabias crude oil exports and production both rise to over two-year high in July]

[NAHB housing market index drops to 46 in September]

[German gas suppliers restart bookings for Nord Stream-1 gas]

[Two German energy companies near long-term deal to buy Qatari LNG]

[UN Secretary-General says multiple crises threaten sustainable development goals]

[UAE accelerates plans to boost oil production]

On the whole, although the geopolitical situation is tense, Europe is facing an energy crisis, the risk of global recession is greater, the market for this week‘s Fed rate hike of 100 basis points is expected to cool slightly, to gold prices to provide safe-haven support and low-buying support; but the prospect of most global central banks to raise interest rates, especially the Fed this week at least 75 basis points is expected to raise interest rates, still make the bulls have concerns; the U.S. bond yields continue to climb higher, limiting Gold prices rally space. Near the Fed’s interest rate resolution, the market wait-and-see mood heated up, the overall trading is expected to be some restrictions, gold prices short term bias oscillating operation.

European countries try to replace the idea of Russian oil fears will be difficult to achieve, supply concerns still support oil prices. And the market remains optimistic about demand, near the Fed resolution coming, the market is relatively vigilant, oil prices maintain range oscillation. Please pay attention to the API inventory data in the short term.

Currency Market Related Information

Currency Market  

The dollar index edged lower on Tuesday, September 20, Beijing time, and is currently trading around 109.57. Trading was generally muted as London and Tokyo were closed for public holidays. However, global equity markets remain on edge and the dollar maintains a firm tone as the Fed is expected to maintain an aggressive tightening path through next year to rein in stubbornly high inflation.

The focus of this trading day: the Australian Federal Reserve released the minutes of its monetary policy meeting and the member of the ECB Governing Council Muller spoke.

The dollar index has surged 14.7% since the beginning of the year, but recently maintained a narrow range of oscillations, closing down 0.05% at 109.60 on Monday.

The euro closed up 0.09% against the dollar at 1.0021 on Monday. Eurozone economic weakness concerns do not dissipate, and still limit the euro gains.

Economists surveyed now believe that the next 12 months, the Eurozone economy contracted for two consecutive quarters of 80%, which is higher than the 60% previously surveyed. Germany is the Eurozones largest economy, but also one of the countries most affected by gas supply cuts, whose economy may start contracting as early as this quarter.

The dollar closed up 0.16% against the yen at 143.19 on Monday, still hovering below the level of strong resistance at 145, reinforced by verbal warnings from Japanese officials to step up intervention in the currency market. The Bank of Japan will hold an interest rate resolution on Sept. 22, and it is widely expected to stick to its massive stimulus measures unchanged and maintain its ultra-easy policy. But a turning point in Japanese monetary policy may come sooner than the market expects, the central bank recently abandoned the word “temporary” to describe the rise in consumer prices.

The pound closed up 0.08% against the dollar at 1.14318 on Monday. British retail sales fell sharply in July, as British consumers struggled to cope with soaring prices and high energy costs. From July to August this year, British goods purchases fell 1.6 percent, reversing a modest increase in the previous month.

A number of markets fall on public holidays this week, which could make liquidity lower and lead to more dramatic price swings. Japan and the UK are closed on Monday, Australia is closed on Thursday and Japan is closed again on Friday for the holiday.

Institutional Market View point

1. Westpac: The Australian Federal Reserve is expected to raise interest rates by 25 basis points in October

2. Singapore OCBC Bank: If the outside world believes that the Fed is not so hawkish, the U.S. index may fall back after the interest rate resolution

3. Commerzbank: If the Feds interest rate peak was raised sharply, it will support the dollar

4. Swiss National Bank(SNB): the next few months the Swiss franc may keep rising

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