Fed’s FOMC meeting ends this afternoon; markets a bit jittery. The Federal Reserve’s Open Market Committee (FOMC) meeting on U.S. monetary policy ends this afternoon with a statement and press conference from Fed Chair Kevin Warsh. “Hike or Hold? Fed’s Warsh Has Markets Unsure.” That is a Bloomberg headline today. The Fed is expected by most of the marketplace to hold interest rates steady. However, some market participants are eyeing the possibility of a surprise hike as patience with high inflation wears thin. Fed officials have kept rates on hold this year as they wait for temporary price pressures to wane, but concern is mounting that inflation won’t reach the Fed’s target unless higher rates are used to rein in demand.
U.S.-Iran hostilities resume; crude oil rallies. Iran fired on American forces overnight and the U.S. and Saudi Arabia struck Tehran-backed militias in Iraq, abruptly ending a days-long lull in hostilities. The U.S. and Iran had paused attacks at the end of last week to give diplomacy another chance, leading to a significant drop in energy prices. However, late Tuesday Saudi Arabia said it intercepted drones launched by Iraqi groups that were targeting its oil facilities for a second straight day. Shortly after, the U.S. military said Iran’s military fired multiple ballistic missiles from Iran at American troops in the region, with all the projectiles being thwarted. Iranian media said Iran’s military targeted a base in Jordan in response to “aggressive US actions,” without offering details, said a Bloomberg report. The U.S. and Saudi Arabia then jointly hit weapons and other sites belonging to “Iran-aligned terrorists” in Iraq, the U.S. military said. Iran had, according to the U.S., directed the same militias to launch more than 30 drone attacks in the past few days. “The latest skirmishing underscores how far Iran and the U.S. are from formally restarting peace negotiations, let alone agreeing a deal to permanently end their war and reopen the Strait of Hormuz,” said the Bloomberg report. Crude oil prices jumped today, with Brent trading up almost 4% to $87.10 a barrel. That extends its gain for July to 20%, though it remains far below the level of $100 reached last Thursday, just before the U.S. and Iran halted attacks on one another. Nymex WTI crude oil today rallied to a high of $83.30 a barrel.
Ukraine says it attacked major Rosneft oil refinery in Russia. Ukraine says it attacked a refinery owned by Russia’s largest oil producer, Rosneft PJSC, overnight--its first strike on a major oil-processing facility in nearly two weeks, Bloomberg reported. “The attack resulted in a fire at the plant, Ukraine’s General Staff said in a statement on its Telegram account, providing no further details. The Ryazan refinery is around 75 miles from Moscow. It’s been the target of multiple Ukrainian drone attacks,” said the report. Ukraine intensified its strikes on Russia’s downstream industry from May through mid-July to limit Russia’s ability to process crude and produce fuel. The strikes contributed to gasoline shortages across the country. Moscow imposed a temporary ban on exports of most gasoline, diesel and jet fuel. However, in the past two weeks Ukraine has switched focus and stepped up attacks on commercial ships in the Black Sea and the Sea of Azov. The shift has allowed several Russian refineries to resume operations, easing domestic fuel shortages. At the same time, Russia has been hitting key Ukrainian ports and vessels in the Black Sea, halting some commodity loadings.
U.S. risks escalating trade tension with China. The U.S. has tightened curbs on some foreign-made robots and inverters, citing possible “supply chain vulnerabilities” identified by national security officials, said a Bloomberg report. The Federal Communications Commission added “advanced robotic devices” and connected inverters to its registry of communications-related items it considers posing an “unacceptable risk,” said the report. China responded by saying it opposed the use of the concept of national security to target Chinese companies, and will take “all necessary measures” to defend its firms. The U.S. announcement didn’t mention Beijing directly, saying only the curbs apply to foreign-made products. However, given China’s dominance in robotics and inverters, which convert solar and battery power into usable electricity, the move is effectively a targeted ban, said Bloomberg, adding, “Washington’s move will likely add to tension between the economic superpowers even as officials try to maintain a fragile trade truce before President Trump and Chinese counterpart Xi Jinping meet again in September.”
The key outside markets today see the U.S. dollar index slightly lower. September Nymex WTI crude oil prices are solidly higher and trading around $83.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.614%.
Technically, August gold futures see a price downtrend on the daily bar chart that has stalled out. Bulls’ next upside price objective is to produce a close above solid resistance at the July high of $4,400.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the June low of $3,955.40. First resistance is seen at $4,050.00 and then at Tuesday’s high of $4,085.70. First support is seen at $4,000.00 and then at $3,955.40. Wyckoff's Market Rating: 3.0
September silver futures also see price downtrend on the daily bar chart has stalled out. The next upside price objective for the bulls is closing prices above solid technical resistance at $65.00. The next downside price objective for the bears is closing prices below solid support at $50.00. First resistance is seen at $60.00 and then at last week’s high of $61.27. Next support is seen at $56.13 and then at the July low of $55.00. Wyckoff's Market Rating: 2.5
