Mohicans markets：Focus on the EIA Crude Oil Inventory Data in the Evening

At 02:00 the next day, the Federal Reserves FOMC announced its interest rate decision and policy statement; at 02:30 the next day, Fed Chairman Powell held a monetary policy press conference.

According to the latest CME “Fed Watch”, the probability of the Fed raising interest rates by 75 basis points in September is 82%, and the probability of raising interest rates by 100 basis points is 18%. The market fully priced in a 75 basis point hike. The dot-plot to be released at this meeting is the most important and will be seen as a road map for a real monetary tightening. In economic forecasts, the Federal Reserve is expected to raise its unemployment rate forecast. Powell's post-meeting speech is likely to be hawkish, and the overall tone is expected to be the same as the central bank's annual meeting late last month.

Global View - Mainstream Market

On September 21, Tuesday, Beijing time, spot gold fell sharply after failing to challenge the $1,680 mark in Asian trading, and once fell below the $1660 mark, the high point fell by about $20, and finally closed down 0.66% at $1664.94 per ounce;

Spot silver fell with gold and finally closed down 1.55% at $19.27 per ounce. The U.S. dollar index rebounded sharply after falling to a low of 109.36, and finally closed up 0.54% at 110.18; the 10-year U.S. Treasury yield rose sharply and closed at 3.569%.

The yield on the U.S. 30-year Treasury note rose to 3.574%, the highest since April 2014. The 2-year U.S. Treasury yield hit 3.973 percent, its highest since November 2007.

In terms of crude oil, both oil prices dived in the U.S. session, with WTI crude oil closing down 0.88% at $84.26 a barrel; Brent crude oil closing down 0.73% at $90.92 a barrel.

A sharp interest rate hike is a foregone conclusion. On Tuesday, U.S. stocks opened lower and moved lower. The Dow closed down 1.01%, the Nasdaq closed down 0.95%, and the S&P 500 closed down 1.13%. Ford Motor closed down about 12% as the company expects supplier costs to soar by $1 billion in the third quarter.  

European stocks generally closed down. Germany's DAX index closed down 1.03% at 12,670.83 points, the UK's FTSE 100 index closed down 0.61% at 7,192.66 points, and the European Stoxx 50 index closed down 0.93% at 3,467.09 points.

Precious metals and energy market related information

Precious metals

On Tuesday, September 20, Beijing time, this trading day pays attention to the US real estate market data, Canadian CPI data, European Central Bank President Lagarde's speech, and pay attention to news related to the geopolitical situation.

Other major central banks are also expected to continue to tighten monetary policy in the face of surging inflation. Sweden's central bank raised interest rates by a full 100 basis points on Tuesday. The UK, Norway, Switzerland and Japan will also hold monetary policy meetings this week.

Crude Oil

On Wednesday, September 21, Beijing time, please notice：

During the day, please focus on the U.S. annualized total of Existing Home Sales in August, EIA data; At 2:00 on Thursday, the Federal Reserve will announce the interest rate resolution.

Bullish factors affecting oil prices

【Most gas stations in Hungary will be out of fuel next week】

【British train drivers union will strike in October】

【Four occupied regions of Ukraine plan to hold referendums on joining Russia】

Bearish factors affecting oil prices

【U.S. Gasoline Imports from Europe Rebound from Months Low】

【International Energy Agency calls for global ban on gasoline and diesel vehicle sales by 2035】

【U.S. Stocks Suffer from Nervousness Ahead of Fed Decision and Ford's Gloomy Earnings Forecast】

【The U.S. Housing Starts Surge in August, But Plunge in Building Permits Signals Weakness in Housing Market】

【U.S. crude inventories rose by about 1 million barrels last week】

Currency Market Related Information

Currency Market

On Wednesday, September 21, Beijing time, the Federal Reserve started its two-day meeting on Tuesday. Interest rate futures traders expect an 83 % chance of a 75 basis point rate hike and a 17 % chance of a 100 basis point rate hike.

The dollar index ended Tuesdays session up 0.5% at 110.19, slightly below the more than 20-year high of 110.79 reached earlier this month and on track for its fifth weekly gain in six weeks. The dollar has surged about 15% so far this year and is on track to record its biggest annual percentage gain in 41 years.

The relationship between European currencies and central bank policy has been broken, with markets increasingly trading on Europes energy and growth prospects. The euro slipped 0.53% against the dollar to 0.9968 on Tuesday, after falling to $0.9864 on Sept. 6, which was the lowest in 20 years.

The pound fell 0.45% against the dollar to close at 1.1379 on Tuesday. The Bank of England will announce its interest rate decision on Thursday, and investors are split on the likelihood of a 50 or 75 basis point rate hike.

The Bank of Japan will also meet this week, but is widely expected to maintain its ultra-loose stimulus policy, including fixing the 10-year government bond yield near zero to support the fragile economic recovery. As a result of this policy, the yen has plunged nearly 25% this year, with the dollar ending Tuesday's trading up 0.36% against the yen to close at 143.70. The week-long consolidation trend continued after climbing to a 24-year high of 144.99 on Sept. 7.

The Canadian dollar weakened sharply on Tuesday, with the dollar surging 0.88% against the Canadian dollar on Tuesday. It touched an intraday high of 1.3374, which was a new low since October 2020.

Institutional Market View point

【Keel Points Chief Economic Advisor: the Fed expected to raise rates by 75 bps, which is an important step toward restrictive policy】

【Citi: Canadian core inflation risk still tends to be on the upside】

【JP Morgan: the U.S. economic “clouds” are accumulating】

【HSBC: The euro is expected to fall below its yearly low against the dollar in the next few weeks】

【Societe Generale: Gold is extremely vulnerable to short-covering】

【TD Securities: Precious metals prices may fall further】

【Wall Street analysts: the Fed ignoring recession risk will put gold in trouble again】

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