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Federal reserve to keep rates unchanged

Markets Prepare for FOMC Minutes, EURUSD Drops as ECB Comments on Rate Hikes & Crude Stockpiles Decline

Gold slips, prior to FOMC minutes

Following recent gains, Gold fell lower on Wednesday, as markets were preparing for the release of FOMC minutes.

The minutes will show the thinking behind the Fed’s 50 basis point hike in April, but also their views for the upcoming months.

Many expect that inflation will peak in Q4, with the U.S. economy entering recession as a result.

Indices were mostly unchanged ahead of Wednesday’s minutes, with the USD gaining on the day.

XAUUSD fell to a low of $1,847 earlier today.

EURUSD drops, as 50 basis point hike not ruled out

EURUSD was a big mover during the hump-day session, as traders responded to news that the ECB has not ruled out a 50 basis point hike.

We saw a similar quote attributed to the Federal Reserve prior to their last hike, and it seems the ECB could be following this playbook.

Speaking today, Senior official at the European Central Bank, Klaas Knot stated that he was unable to refuse such an increase in rates.

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He went on to add, “We can only afford gradualism if inflation expectations remain well-anchored. If you now look at the various measures of inflation expectations in the euro area, they are now what I would say at the upper limit of still being well-anchored”.

As a result, EURUSD dropped on Wednesday, following recent back-to-back gains.

Oil higher, following decline in crude stockpiles last week

Oil prices were marginally higher on Wednesday, as markets reacted to the latest crude inventories data.

Figures from the Energy Information Administration stated that inventories fell by 1.019 million barrels last week.


source: tradingeconomics.com

This is more than markets had expected, after analysts forecasted a drawdown of 0.737 million barrels.

News of this follows up from yesterday’s comment by European Commission President Ursula von der Leyen stating that she expects the Russian oil embargo to be approved shortly.

Despite this, WTI hit a high of $113 earlier today.

 “The whole world is simply nothing more than a flow chart for capital.”

-Paul Tudor Jones.

Eliman Dambell

Senior Market Analyst