FOMC minutes are awaited and RBNZ hikes by 75 bps
Gold => The commodity falls below 1740
Tesla => The stock trades 57% lower this year
NZD/USD => The pair rises above 0.6150
Gold looks to FOMC minutes
Gold benefited from a weaker USD yesterday, ending the day 0.16% higher. However, Gold is paring those gains in early trade. Gold volatility could pick up across the session, which is packed with economic data releases, Federal speakers, and the minutes from the latest FOMC minutes. The minutes from the meeting are expected to confirm the Fed’s commitment to lowering inflation. It’s worth noting that the meeting was held before the CPI inflation release, which showed that inflation cooled in October, fuelling bets that the Fed could downshift the pace of hikes. Should the minutes show signs of a less hawkish stance from policymakers, non-yielding could rise.
| US Composite PMI | Expected: 47.7 (0.4) | Previous: 48.2 |
Where might the Gold price head to?
Gold extended its breakout from the multi-month falling trendline to 1786, a level that has offered support or resistance on several occasions throughout the year. The price has since fallen lower to support at 1735. Where the price goes from here depends on where the breakout could be. A fall below 1735 and 1730, the October high exposes the 20 sma at 1706. On the upside, buyers might be encouraged by the RSI over 50 and the 20 sma crossing above the 50 sma. Buyers would need to rise over 1786, the November high, to bring 1808, the August high, into target.
Tesla falls to a two-year low. Here’s why.
Tesla’s share price dropped to its lowest level since November 2020 at $166 before rising off this level to end the session 1.2% higher. Still, across the past six months, the stock trades 25% lower, and the year to date is down 57% as the EV maker faces several headwinds. Most recently, Tesla has been recalling hundreds of thousands of cars owing to a wide range of faults. Rising COVID cases in China are another headwind, raising fears of lockdowns and slowing production and growth. This is happening at a time when competition is ramping up in the EV market. Then there is the Twitter saga and news that Elon Musk sold Tesla shares to buy Twitter. Furthermore, concerns are rising that Twitter is distracting Musk from Tesla’s development. These factors, plus growing fears of a recession in Europe and the US, leave investors with little to be excited about.
NZD/USD rises after RBNZ’s record hike
NZD/USD is rising after the RBNZ raised interest rates by 0.75%, marking the largest rate hike in the central bank’s history. In its fight against two-decade-high inflation, at 7.2% and record-high wage inflation, the central bank has raised interest rates by more than 2.6% this year, taking the Official Cash Rate to 4.25%. The RBNZ now expects the OCR to rise to 5.5% next year, up from the 4.1% forecast in August, suggesting that the fight against inflation is far from over. Gains in the NZD could be capped after the RBNZ warned of a recession next year and as COVID cases in China keep rising. Looking ahead, several releases from the US, including PMI data, jobless claims, and durable goods, are due to be released ahead of the Fed minutes.
Support can be found at 0.6060 (last week’s low) and 0.60 (round number).
Resistance could be seen at 0.6210 (November high) and 0.6350 (July high).
