US PCE rates due out today

The main event of the day are set to be the US PCE rates which are due to be released during today’s American trading session.The PCE rates are the Fed’s favourite tool for measuring inflationary pressures and hence the release today could dictate the Fed’s narrative in regards to their monetary policy decisions going forward. Moreover, according to economists the PCE rates are expected to showcase an acceleration of inflationary pressures in the US economy and could thus validate Fed Chair Powell’s concerns about easing the bank’s monetary policy too early. Hence in such a scenario where the PCE rates come in as expected or higher it could possibly provide support for the greenback. In our view, we would not be surprised to see the inflation print coming in as expected by economists.On a geopolitical level, Bloomberg has reported that “European diplomats warned the Kremlin this week that NATO is ready to respond to further violations of its airspace with full force, including by shooting down Russian planes, according to officials familiar with the exchange.” The apparent commitment by Europe and their warnings towards Russia could rapidly heighten tensions in the continent, and thus the possibility that Europe could possibly shoot down Russian jets may aid gold’s price given its safe haven asset status.Over in Asia, Japan’s Tokyo CPI rates were released earlier on today. The Tokyo CPI rate for September on a core level came in lower than expected by coming in at 2.5% versus 2.8% which may have disappointed Yen traders as it failed to showcase the anticipated acceleration of inflationary pressures in the Japanese economy. In turn the financial release may have weighed on the JPY.

USD/JPY appears to be moving in an upwards fashion, after clearing our sideways moving channel which was incepted on the 11th of July, in addition to clearing our resistance now turned to support at the 148.50 (S1) level. We opt for a bullish outlook for the pair and supporting our case are the aforementioned factors in addition to the RSI indicator below our chart which currently registers a figure above 60, implying a bullish market sentiment. For our bullish outlook to be maintained we would require the pair to remain above our 148.50 (S1) support level if not also clearing our 150.75 (R1) resistance line with the next possible target for the bulls being the 153.35 (R2) resistance level. However, in the event of a clear break below our 148.50 (S1) support level we would opt for a bearish outlook for the pair with the next possible target for the bears being our 146.25 (S2) support line. Lastly, for a sideways bias we would require the pair to remain confined between our 148.50 (S1) support level and our 150.75 (R1) resistance line.

XAU/USD appears to be moving in an upwards fashion after having barely cleared our resistance now turned to support at the 3740 (S1) level. We opt for a bullish outlook for the commodity’s price and supporting our case is the RSI indicator below our chart which currently registers a figure near 70, implying a strong bullish market sentiment. For our bullish outlook to be maintained we would require gold’s price to remain above our 3740 (S1) support level, if not also breaking above our 3860 (R1) hypothetical resistance line with the next possible target for the bulls also being our 3980 (R2) hypothetical resistance level. On the other hand, we would opt for a bearish outlook in the event of a clear break below our 3740 (S1) support level with the next possible target for the bears being the 3620 (S2) support level.

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Today we note the release of Sweden’s trade balance figure for August, the US PCE rates for August, Canada’s GDP rate for July and the US final University of Michigan consumer sentiment figure for the month of September. On a monetary level we note the speeches by ECB Board Member Cipollone, Richmond Fed President Barkin, and we would like to highlight the speech by Fed Board Governor Bowman, considering the topic which will be discussed.