Global markets were relatively unmoved during late trading on Wednesday after the slightly hawkish minutes from the Federal Reserve failed to convince participants of a March interest rate hike. Although many Fed members have repeatedly voiced that it may be appropriate to raise interest rates again ‘fairly soon’, it is the lack of commitment to a hiking timeline and overall ambiguity that continues to leave investors empty handed. With the Trump uncertainty still a major theme and concerns continue to heighten over how his policies may impact the US economic outlook, the central bank may be encouraged to maintain a cautious stance till the second quarter of 2017. While there continues to be discussions of the growing chorus of hawkish Fed officials opening the doors for a March hike, it seems unlikely that rates will be hiked in March with June looking more possible. A scenario where US economic data repeatedly exceeds expectations with the labour force displaying stability could prompt the central bank to surprise markets by taking action in May.
Commodity spotlight – WTI
WTI Crude displayed sharp levels of volatility on Wednesday as markets re-evaluated the intricate supply and demand dynamics that have driven the global oil markets. The ongoing developments with OPEC and U.S shale simply placed oil prices on a rollercoaster ride with the oversupply fears still lingering in the background. Although OPEC members have respected their pledge to cutting production and stabilising oil markets, the threat that U.S shale has benefited from the OPEC cut deal continues to spark concerns of the overall production deal falling apart. WTI Crude remains pressured below $55 on the daily charts with recent comments from Qatar’s oil minister on how some major oil producers are not in compliance with production cuts, exposing prices to downside shocks. WTI Crude remains buoyed around $54, but weakness below this level could open a path lower towards $52.
Currency spotlight – EURUSD
The political uncertainty enshrouding the Eurozone has left the Euro vulnerable to heavy losses this week. From a technical standpoint, the EUR/USD has come under renewed selling pressure on the daily timeframe with sellers exploiting the downside momentum to take prices lower towards 1.0500. With there being consistently lower lows and lower highs coupled with lagging indicators pointing to the downside, the prerequisites of a bearish trend have been fulfilled. A decisive breakdown below 1.0500 could encourage a further decline lower towards the next relevant support at 1.0350.