Market Overview: Both gold and silver are seeing strong buying in early action today. A weaker dollar index may be fueling some of the buying to kick off the new trading week, while bargain hunters may also be active today. Despite the gains being seen today, the precious metals markets may be vulnerable to heightened volatility this week as the Bank of Japan and FOMC meetings approach.
Key Data Points: The Housing Market Index is set for release later this morning and consensus estimates are looking for a reading of 60. A reading at this level would be indicative of ongoing optimism in the housing market which has been a strong point of economic activity this year.
There are no other major data points set for release today. Investors will look forward to the Bank of Japan meeting as well as the FOMC meeting and subsequent press conference.
Outside Markets: Stocks opened the trading week stronger out of the gate this morning and may also potentially see some volatility ahead of the Fed.
Crude oil is also trading higher today while the dollar index is moving lower. The bounce in crude is likely being cheered on by stock investors following some decent losses last week.
Terrorism has apparently once again reared its ugly head over the weekend, with a bombing taking place in the Chelsea neighborhood of Manhattan as well as a New Jersey shore town. Other explosive devices were also discovered and the area is on high alert. In addition, a man stabbed and injured nine people in a Minnesota mall before being shot by an off-duty police officer.
These types of incidents have seemingly become far too common, and financial markets do not seem to show much of a reaction anymore.
The Big Picture: It appears to be all about the Fed still. Mixed economic data seen recently may make it difficult for the central bank to tighten further at this point, although the Fed could potentially signal it still plans to hike rates before the end of the year. The chances of a rate hike this week are very small, and chances of a December rate hike remain above 50 percent.
Some action is expected by the Bank of Japan this week, although the type and scope of any action remains unclear. The BoJ could push rates further into negative territory, or could use other measures to try to stimulate the Japanese economy.
