Weekly Focus: FOMC Minutes and Thanksgiving Day

This festive week for the United States started on a slightly negative tone as futures on U.S. stock indexes and crude declined. The U.S. Dollar gained, signaling the deterioration of risk appetite. Nothing serious though.

The festive mood, together with actions by the Federal Reserve (Fed), could help support markets. So, the S&P 500 broad market index could return to last week’s highs at 4040-4050 points. This would, nevertheless, be followed by a decline, but even if this is the case, it will not damper Thanksgiving day. Whether or not the Fed will deliver such gifts to the market remains to be seen, but there are plenty opportunities this week for this to happen.

The Fed may surprise markets with its Federal Open Market Committee (FOMC) Minutes that will be released on Wednesday. But before that, FOMC members James Bullard and Esther George may mention lower inflation and rising fears over a possible recession in the U.S. in their testaments. That could be enough to push the S&P 500 index up by 2-2.5%.

So, this week could be a rather positive one if the Fed does support markets, or slightly negative if the central bank does no perform any surprises. In the latter case investors may prefer to close their trades over the long holiday period. Technical pictures are on the positive side though. The S&P 500 index continues to run inside the upside formation with targets at 4100-4200 points. The nearest support is at 3880-3900 points while the resistance is at 4000-4050. So, a walk between these two margins is possible.

The oil market is suffering as prices are sliding down amid the aggressive downside formation. Brent crude prices are testing the support at $85-87 per barrel. In case of a successful scenario, prices may slide to $78-80 per barrel, claiming the downside path towards $55-65 per barrel. This extreme scenario would confirm fears about the upcoming recession and stock indexes would plunge.

Gold prices continued down, reaching $1740 per troy ounce on Monday and possibly preparing to test the support at $1710. So, chances of gold prices reaching this year’s lows at $1600-1650 are rising.

The money market continues to experience elevated volatility that prevents the use of short-term signals. So, it is better to place orders considering longer perspectives. Short trades for AUDUSD that were opened at 0.63700-0.64200 are still on the go and may be terminated when the pair reaches the 0.59000 area.