Posted on March 20, 2017
Market Overview: The metals are trading slightly higher in quiet action to kick off the trading week. Investors are still digesting last week’s FOMC meeting, at which the central bank raised the Fed Funds rate by a quarter point. This move was expected by markets, however, the markets were likely more interested in the Fed’s forecast. After a significant amount of hawkish rhetoric from various Fed officials in recent weeks, the central bank did not make any changes to its forecast for three interest rates hikes this year and three next year.
Key Data Points: There are no major economic reports set for release today. Chicago Federal Reserve President Charles Evans will be speaking in two engagements today.
The rest of the trading week will see other Fed officials speaking at various engagements. It will also see the latest readings on weekly jobless claims, MBA Mortgage Applications, Existing Home Sales, Durable Goods Orders, new Home Sales and more.
Outside Markets: Stocks are slightly lower in early action to begin the new trading week. Stocks have remained near recent highs for several sessions now and are within earshot of the 2400 level on the S&P 500. The stock market has been in consolidation mode, and may be awaiting further developments on the Trump administration’s tax reform and fiscal spending plans before trying for new all-time highs.
The dollar index is moving slightly lower today and at currently at multi-week lows. The dollar bears may have been encouraged by the Fed’s decision to stick with its previous forecast. Some investors were likely thinking the Fed would take an even more hawkish tone and perhaps pencil in four rate hikes this year rather than three.
The Big Picture: Although the metals have been moving higher again, they are still off of recent highs. The more dovish-sounding Fed last week likely reignited some buying interest in the complex, but it is still unclear of the metals will be able to move beyond recent highs. The dollar index has remained under some pressure which may benefit the metals markets. As long as stocks keep moving to the upside, however, the metals complex may have a difficult time moving significantly higher.
For now, positive technical momentum may spill over into price action this week. Any disappointments in key data releases may also potentially lift the metals complex.