S&P 500 Moves Higher Before Fed Announcement

U.S. markets finished near highs yesterday with the S&P 500 setting a new record high. The Dow Jones is also within 50 points of its all-time record as investors are looking forward to the Federal Open Market Committee (FOMC) Announcement at the end of its two day policy meeting. This is due out later today.

The FOMC started their two day meeting yesterday and we expect them to end it with no change in their massive $85 billion a month asset purchase program. We are expecting a delay of tapering till at least march 2014.

STOCKS

A quick note before we begin. Early in the trading day, overnight, the Nasdaq Composite suffered another technical glitch suspending trading for over an hour. The explained that this recent outage was due to human error.

The DJIA jumped 111.42 points to close at 15,680.34. We are now within 50 points of its all-time high set back in September. The S&P 500 saw a rise of nearly ten points to close at 1,771.95. The Nasdaq Composite was up 12.21 points to end the day at 3,952.34.

The Nikkei rose nearly 1.2 percent at one point as the index followed a weakening yen. The USD/JPY moved towards the $98 mark for the first time in three days. The Shanghai Composite rose 0.8 percent as the People’s Bank of China jawboned the market claiming liquidity conditions would “remain ample.” This was enough to cause the market to come off its eight week low set yesterday.

The Australian ASX 200 is continuing higher to its five year high at 5,457. This mark was hit earlier this week. The AUD/USD is continuing to trade around $0.9455 which helping to support equities.

CURRENCIES

GBP/USD (1.6041) continues to inch lower after forming a double top seen on the chart below. We seem to be stuck in a broad range from 1.6019 to the top at 1.6265. A move below 1.6000 will cause a dip towards 1.5885. This is a key support level that must be watched.

USD/JPY (98.154) the Dollar strengthened today above 98.00. A break above 99.00 and then 100.00 would be very bullish here. EUR/USD (1.3768) is still correcting or trading sideways. Depends how you look at the chart now. We will be stuck until the FOMC announcement later today. A surprise, any surprise, can either send it crashing through 1.40 or below 1.3450.

COMMODITIES

Gold (1343.50) fell yesterday and into today below the 1350 support level. We have support at this current level that needs to hold to stave off a further fall. WTI Crude (97.70) has fallen again today as we saw and increase in U.S. inventories. We have support at this level and if it holds, we can rise back to 100.00.

Copper (3.292) is continuing to consolidate and we expect to be range bound for some time. A break above 3.30 will be bullish and a break below 3.25 bearish.

TODAY’S OUTLOOK

Aside from the pending FOMC announcement today, we have other key U.S. data coming out which should drive the markets. We will get mortgage applications, the ADP unemployment report and the CPI number.