The Fed may need to lift interest rates further | 01 September 2023

#SP500:

U.S. stock investors are bracing for a potentially volatile September as the market faces key economic data reports, a Federal Reserve meeting and worries over a possible government shutdown during a month of historically muted equity performance. The Fed’s monetary policy meeting on Sep. 20 stands as another potential source of volatility: Friday’s speech from Fed Chairman Jerome Powell in Jackson Hole fueled expectations of another rate increase this year, though a move in September was seen as less likely. Meanwhile, a feud over spending cuts between hardline and centrist Republicans in the U.S. House of Representatives raises the risk that of a fourth federal government shutdown in a decade if lawmakers cannot reach a deal by Sep. 30, when funding runs out with the end of the current fiscal year.

Trading recommendation: sell 4440 and take profit 4295.

XAUUSD:

Federal Reserve Chair Jerome Powell said the central bank may need to lift interest rates further to finish the job of lowering inflation on a sustained basis. Powell has repeatedly said that returning inflation to the Fed's 2% target would likely require some softening in the job market. While he acknowledged a number of signs that labor market tightness is easing, his remarks suggest policymakers are on alert for indications that progress could stall out or reverse, which could augur for either more rate hikes or an even more extended period of higher rates. This is a negative signal for precious metals.

Trading recommendation: sell 1925 and take profit 1880.

#WTI:

Oil futures climbed as U.S. diesel prices soared, the number of oil rigs dropped and a fire broke out at a refinery in Louisiana. The main thing was concern about diesel prices, the diesel crack spread and worries about diesel shortages when refineries go into maintenance. In August, U.S. energy firms cut the number of active oil rigs for a ninth straight month, energy services firm Baker Hughes said in its closely followed report. Crude prices rose despite weak economic news from Germany, Europe's biggest economy, and the U.S. dollar rose to an 11-week high against a basket of other currencies after U.S. Federal Reserve Chair Jerome Powell said further interest rate hikes may be needed to fight inflation. Higher interest rates can slow economic growth and reduce oil demand. A stronger dollar can also slow demand by making oil more expensive for holders of other currencies.

Trading recommendation: range 77.50 - 80.30