Fed Minutes, Gold and the NAS100: 3 Markets, 1 Big Question
17th August
Key takeaways
The Fed minutes are the main event risk this week and could reshape expectations around US interest rates.
Gold remains constructive above $4,300 as lower rate expectations support demand.
The NAS100 retains a bullish bias after confirming an ascending triangle breakout.
Lukman Otunuga
Head of Market Research
Will the Federal Reserve strike a dovish tone or remind markets that inflation risks still linger?
That is the question hanging over financial markets this week.
A run of softer-than-expected US economic data has dramatically changed expectations around the Fed's next move. Slower inflation, weaker employment figures, higher jobless claims and softer consumer sentiment have all strengthened the view that policymakers may be less inclined to raise interest rates again.
The shift has been significant. Markets have rapidly scaled back expectations for future rate hikes, helping to drag the US Dollar Index lower and supporting a broad range of assets, from gold to technology stocks.
With no major US data releases scheduled, attention will be firmly fixed on the release of the latest Federal Reserve meeting minutes. Investors will be searching for clues on how seriously officials are considering further tightening and whether the recent batch of economic data has altered the policy outlook.
At the same time, traders continue to monitor developments surrounding US-Iran negotiations. Any meaningful progress could improve global risk sentiment, while prolonged deadlock risks fuelling fresh bouts of market volatility.
Three Things to Watch This Week
- Fed Minutes: Investors will look for clues on whether policymakers are leaning more dovish or hawkish ahead of upcoming policy decisions.
- US-Iran Developments: Progress in negotiations could boost investor confidence, while setbacks may increase volatility across commodities and risk assets.
- Global Inflation and PMI Data: Markets will digest inflation reports from Europe and the UK alongside business activity surveys from major economies.
Gold Remains Supported Above Key Levels
Gold continues to trade above the psychologically important $4,300 level, supported by a weaker dollar and fading expectations of additional Fed tightening.
However, the metal remains caught between competing forces. On one side, softer US economic data and lower rate expectations support bullion. On the other, lingering geopolitical uncertainty continues to influence investor sentiment and limit conviction.
Should the Fed reinforce a more dovish message, gold could extend gains toward the next key resistance zone around $4,450 to $4,480. Conversely, a hawkish surprise may strengthen the dollar and trigger a pullback toward $4,250.
For now, the broader technical picture remains constructive with trend, RSI and MACD indicators pointing higher.
USDCAD Awaits Inflation Catalyst
The Canadian dollar faces a major test with the release of Canada's latest inflation figures.
USDCAD remains under pressure after breaking below an important support channel and the 200-day moving average. This technical breakdown suggests sellers still have control, although incoming inflation data could determine whether the next move is a continuation lower or a reversal higher.
A softer Canadian inflation reading may support the pair, while stronger-than-expected data could accelerate downside momentum.
NAS100 Targets Fresh Highs
The NAS100 continues to stand out as one of the strongest major equity indices.
The index recently completed an ascending triangle breakout, a pattern often associated with trend continuation. This technical development increases the possibility of a retest of recent record highs.
A weaker dollar and reduced expectations for higher rates remain supportive for growth and technology stocks. However, any hawkish signals from the Fed could challenge this bullish narrative.
At present, momentum indicators remain positive and the broader trend continues to favour the upside.
Frequently asked questions
The minutes provide insight into policymakers' thinking and can influence expectations around future interest-rate decisions.
Gold does not pay interest, making it more attractive when interest-rate expectations fall and the US dollar weakens.
Lower rate expectations, a weaker dollar and positive technical momentum continue to underpin demand for technology and growth stocks.
