The Week Ahead 18th – 22nd September: Waiting for the Federal Reserve announcement regarding interest rate

<p>Welcome to Key to Markets preview of the Week Ahead.</p>
<h2>Currency Pair Performance</h2>
<p>5-day performance as of <strong>September 14, 2023. 11:30 GMT.</strong></p>
<p><img decoding="async" fetchpriority="high" class="alignnone wp-image-25636 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-1-2.png" alt="" width="602" height="253" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-1-2.png 602w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-1-2-300×126.png 300w" sizes="(max-width: 602px) 100vw, 602px" /></p>
<p>Source: finviz.com</p>
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<h2>10 Big Stories Last Week</h2>
<p>In case you missed it…</p>
<p><strong>ARM went public.</strong> The UK chipmaker floated on the Nasdaq exchange at a price of $51 per share, valuing the company at around $54 billion.</p>
<p><strong>US inflation rose.</strong> Headline CPI rose to 3.7%, up from 3.2%, but core inflation cooled to 4.3% from 4.7%. The data supports the view that the Fed will leave rates unchanged next week.</p>
<p><strong>UK GDP contracted in July.</strong> UK GDP shrank by 0.5% MoM in July, after rising 0.5% in June. Forecasts has been for a -0.2% contraction.</p>
<p><strong>BoJ hinted to ending negative rates.</strong> BoJ’s governor, Kazuo Ueda said that the central bank could have sufficient data by the end of the year to shift away from its dovish policy stance.</p>
<p><strong>ECB hikes interest rates.</strong> The ECB raised interest rates by 25 basis points to a record 4% to tame inflation, which is at 5.3% and despite concerns of a recession in the second half of the year.</p>
<p><strong>Apple’s wonderlust event underwhelmed.</strong> The tech giant unveiled its new iPhone 15 but left prices unchanged in order to attract buyers to a sluggish market. The share price fell.</p>
<p><strong>Oil rose to a new 10-month high.</strong> Oil prices continued rising after an OPEC report warned of a supply deficit across the coming quarters due to Saudi Arabia and Russia’s voluntary supply cuts.</p>
<p><strong>The EU launches a probe into Chinese subsidies for EVs.</strong> The move is a bid to ward off a flood of cheapo EV imports, which could hurt other EV makers.</p>
<p><strong>China cuts banks reserves.</strong> This is the second time that the PBoC has reduced the amount banks need to hold on reserve to lift liquidity and support the faltering economy.</p>
<p><strong>Oracle dropped 11% on disappointing guidance.</strong> The software company beat on earnings but missed on revenue and provided weak current quarter revenue forecasts amid slowing demand.</p>
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<h2>Chart of the Week</h2>
<p><img decoding="async" class="alignnone wp-image-25639 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-2-2.png" alt="" width="602" height="267" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-2-2.png 602w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-2-2-300×133.png 300w" sizes="(max-width: 602px) 100vw, 602px" /></p>
<p>This months US inflation report saw CPPI rise 3.7% YoY, up from 3.2%. Core inflation cooled to 4.3% from 4.7%, the smallest advance in 2 years.</p>
<p>On a monthly basis, US CPI rose 0.6%, the most in over a year and core CPI rose 0.3%, marking the first acceleration since February.</p>
<p>The data raises concerns that the recent pick up in momentum in the US economy is reigniting price pressures. Whilst the Fed and Treasury Secretary Janet Yellen has been optimistic of a soft landing, this reacceleration in inflation could push the Fed to hike rates higher and / or keep rate elevated for longer. This inevitably raises the risk of a recession.</p>
<p>The Fed is expected to keep rates on hold in September but another rate hike this year remains on the table.</p>
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<h2>5 Things to Watch This Week</h2>
<p><strong>1. FOMC rate decision</strong><br />
The Federal Reserve will announce its interest rate decision on Wednesday, September 20, and is widely expected to leave interest rates on hold. The meeting comes as inflation rose for a second consecutive month, but core inflation cooled. Still, with inflation still well above the Fed’s 2% target and oil prices rising, the Fed may still need to hike again before the end of the year. The market is pricing in around a 40% probability of a rate hike in November.</p>
<p><strong>2. BoE rate decision</strong><br />
The BoE will announce its rate decision on Thursday, September 21st, and comes as mixed data makes the decision less clear-cut than in previous meetings. While inflation is cooling, it remains over three times the BoE’s 2% target rate. There are also clear signs that the economy is cooling as PMIs fall below 50, July GDP contracts -0.5%, and unemployment rises to its highest level in 2 years. But wage growth is at a record high and above inflation. BoE’s Andrew Bailey said that the central bank was near the end of its hiking cycle. Could this be the final hike, or could the rising likelihood of a recession prevent the BoE from hiking?</p>
<p><strong>3. BoJ rate decision</strong><br />
The BoJ’s policymakers are increasingly talking up the need to shift away from the ultra-easy monetary policy stance of the past decade. The end of negative rates could now be in sight. While no major policy change is expected at this meeting, investors will watch for a language shift. USD/JPY continues to trade around 147.00. A less dovish-sounding BoJ could pull the pair lower.</p>
<p><strong>4. FedEx earnings</strong><br />
Fedex, the economic bellwether, will report fiscal Q1 earnings after the market closes on Wednesday, September 20. The cargo giant ended fiscal 2023 on a positive note and is now transforming the business to become more efficient and data-driven. Expectations are for profits to rise year on year to EPS$3.71 on revenue of $21.79 billion, down 7.5%.</p>
<p><strong>5. Eurozone PMIs</strong><br />
Data from the eurozone has been painting an increasingly gloomy picture, raining concerns over the economy’s health across the year’s second half. This week’s PMI data is likely to continue along a similar trajectory. Another contraction in eurozone business activity is likely, with the manufacturing sector expected to slow at a faster pace than services. Weak business activity raises the likelihood of a recession in H2.</p>
<p><strong>Economic Calendar Highlights</strong></p>
<p><img decoding="async" class="alignnone wp-image-25642 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-3-2.png" alt="" width="602" height="352" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-3-2.png 602w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-3-2-300×175.png 300w" sizes="(max-width: 602px) 100vw, 602px" /></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25645 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-4.png" alt="" width="602" height="468" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-4.png 602w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Chart-4-300×233.png 300w" sizes="(max-width: 602px) 100vw, 602px" /></p>
<p>Source: FXStreet.com</p>
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<h2>Technical Analysis:</h2>
<p>TA of the major asset classes (Forex – Commodities – Indices…).</p>
<p><strong>EUR/USD (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25656 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/EURUSD-13-1.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/EURUSD-13-1.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/EURUSD-13-1-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/EURUSD-13-1-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/EURUSD-13-1-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/EURUSD-13-1-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/EURUSD-13-1-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>EUR/USD is in a downtrend, making lower highs and lows below the 50 SMA. RSI is in a bearish position and is oversold. The bias is for the bearish trend and momentum to carry the price to test 1.06, with rebounds likely capped at 1.083 then 1.09.</p>
<p><strong>GBP/USD (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25653 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/GBPUSD-13.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/GBPUSD-13.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/GBPUSD-13-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/GBPUSD-13-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/GBPUSD-13-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/GBPUSD-13-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/GBPUSD-13-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>GBP/USD is in a downtrend, forming lower lows and lower highs beneath the 50 SMA. After failing to break 50, RSI is testing the low from August, the lowest its been this year but not oversold. The price just broke down below major support at 1.25.</p>
<p><strong>USD/JPY (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25659 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/USDJPY-13.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/USDJPY-13.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/USDJPY-13-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/USDJPY-13-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/USDJPY-13-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/USDJPY-13-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/USDJPY-13-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>USD/JPY is in an uptrend, making higher highs and lows above the 50 SMA. RSI has twice been rejected at the 65 level. Price just broke out above a small bull flag, suggesting possible continuation higher.</p>
<p><strong>Gold (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25662 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XAUUSD-13.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XAUUSD-13.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XAUUSD-13-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XAUUSD-13-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XAUUSD-13-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XAUUSD-13-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XAUUSD-13-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>XAU/USD is in a downtrend, making lower lows and highs below the 50 SMA. RSI is neutral. The second rebound off 1900 did not go as high, suggesting a possible break lower on the next test.</p>
<p><strong>Brent Oil (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25665 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XBRENT-13.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XBRENT-13.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XBRENT-13-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XBRENT-13-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XBRENT-13-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XBRENT-13-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XBRENT-13-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>XBRENT is in an uptrend, making higher highs and lows above the 50 SMA. RSI is in bullish overbought territory. Price has broken out above the August high (87.6) to make new a YTD high, seemingly breaking above a 9-month-old 70-90 trading range.</p>
<p><strong>US500 (Daily Candlestick Chart)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25668 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XUS500-13.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XUS500-13.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XUS500-13-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XUS500-13-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XUS500-13-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XUS500-13-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/XUS500-13-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /></p>
<p>XUS500 is in an uptrend, making higher highs and lows but below the 50 SMA. RSI is neutral. Price pulled back for 3 days after a strong 4-day rally, indicating that the market has turned more rangebound.</p>
<p>Thank you very much for reading – and have a great week trading!</p>
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<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/the-week-ahead-18th-22nd-september-waiting-for-the-federal-reserve-announcement-regarding-interest-rate-25635/">The Week Ahead 18th – 22nd September: Waiting for the Federal Reserve announcement regarding interest rate</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>