Skip to content

CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

High-for-longer rate outlook as takeaway from FOMC meeting: Gold, Copper, US dollar

The conclusion of the June meeting has seen the Fed keeping rates on hold in a widely-anticipated move, but a high-for-longer rate outlook seems to be on the horizon.

US dollar Source: Bloomberg

Market Recap

The conclusion of the June meeting has seen the Federal Reserve (Fed) keeping rates on hold at 5.00%-5.25% in a widely-anticipated move, but there is less conviction for markets that today’s move will mark the end of its tightening campaign.

A hawkish takeaway came from the Federal Open Market Committee (FOMC) dot plot, with peak rate for 2023 revised to 5.6% from the previous 5.1%, which suggests another 50 basis-point (bp) of tightening by the end of this year. Rate forecasts for 2024 and 2025 were revised upwards as well, which seems to put a high-for-longer rate outlook on the horizon. The justification may come on the back of some persistence in inflationary pressures, with the Fed’s core Personal Consumption Expenditures (PCE) forecasts seen higher at 3.9% for 2023 compared to the 3.6% expected in March.

Comments from Fed Chair Jerome Powell seem to add to the hawkish equation, saying that Fed rate cuts are a 'couple years out', at a time when broad market expectations were pricing for rate cuts by the end of the year. With the July meeting being deemed as a ‘live’ meeting from the Fed Chair, it will leave any rate decision to just a handful of inflation and labour data ahead. Current Fed funds futures continue to lean towards a 25 bp move in July, but its pricing for terminal rate at 5.25%-5.5% are still less hawkish than what the Fed has guided, which leaves any further recalibration on watch.

Treasury yields were on a mixed tone, reflecting some indecision in the aftermath of the FOMC meeting. On the other hand, a high-for-longer rate outlook has not been well-received by gold prices, which saw a sharp paring in initial gains overnight. Intermittent bounces over the past one month have failed to find much of a follow-through, with prices hovering back near its two-month low around the US$1,940 level. Any breakdown to a new lower low may be in sight, which could reinforce its near-term downward bias. Its Relative Strength Index (RSI) continues to trend below the key 50 level, while a key trendline support in place since November 2022 has been invalidated, reflecting sellers in control for the present.

Gold Source: IG charts
Gold Source: IG charts

Asia Open

Asian stocks look set for a slight positive open, with Nikkei +0.17%, ASX +0.31% and KOSPI +0.30% at the time of writing as market participants continue to digest the latest FOMC meeting. The economic calendar this morning has seen first-quarter gross domestic product (GDP) read from New Zealand dragging the country into a technical recession. A 0.1% decline quarter-on-quarter in 1Q, following a 0.7% decline in 4Q, is likely to provide further justification that the Reserve Bank of New Zealand (RBNZ) is done with tightening, which translates to some downward pressure on the New Zealand dollar.

The day ahead will bring focus to Australia’s employment data, followed by a series of economic data out of China (industrial production, retail sales, fixed asset investment). Recent cuts to China’s short-term borrowing costs may drive hopes of a similar adjustment to the one-year Medium-term Lending Facility (MLF) rate later today, with the upcoming economic data likely to add to the recent series of downside surprises and reinforce a low-for-longer growth outlook in China. All three above-mentioned data are expected to display some moderation in year-on-year growth from April.

Copper prices have managed to recover more than 8% since finding support at the US$7,940/tonne level. A reclaim of the RSI above the 50 level, along with a bullish crossover on moving average convergence/divergence (MACD) may point towards some upward momentum in the near term. That said, immediate resistance still stands at the US$8,600/tonne level for now. Greater conviction for a more sustained upside may have to come from a move above the Ichimoku cloud to signal an upward trend in place. On any downside, the US$8,250/tonne level may bring some support from an upward trendline in confluence with a Fibonacci retracement level.

Copper Source: IG charts
Copper Source: IG charts

On the watchlist: Knee-jerk reaction in the US dollar but more signs needed

The FOMC meeting has brought about some volatility in the US dollar overnight, with the release of the dot plot triggering a 0.5% knee-jerk reaction mid-day before some gains were pared during the Fed press conference. Greater conviction for the bulls may have to come from an overturn of the lower-highs-lower-lows formation on the four-hour chart since the start of the month, with immediate resistance to overcome at the 103.12 level.

For now, its RSI has headed below the key 50 level, along with a declining MACD, which calls for the need of a significant build-up in upward momentum to provide some conviction for the bulls as well. Any failure to tap on the hawkish tone from the FOMC meeting for any move higher over subsequent days could point towards ongoing exhaustion, which could place its May bottom in sight for a retest next.

US dollar Source: IG charts
US dollar Source: IG charts

Wednesday: DJIA -0.68%; S&P 500 +0.08%; Nasdaq +0.39%, DAX +0.49%, FTSE +0.10%


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Act on stock opportunities today

Go long or short on thousands of international stocks with CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See opportunity on a stock?

Don’t miss your chance. Log in to take advantage while conditions prevail.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.