Here we are, just waiting for the FOMC rate decision that would be released later today; expectations of a rate cut are varying, future traders are divided between a 78% of cutting down rates to 2.0% and a 22% to pressure rates down to 1.75%. The US economy is in a critical situation at the time being, cutting rates to anchor the sever fall down in the financial institution plus to clam down the irrational exuberance of investors' all around the financial markets.
While markets are just holding on the current levels just for the sake of waiting for today's number one fundamental, believing that a more rate cut than what market participant anticipate would be a positive sign, calming down the terror in markets and bring back the confidence in the feds as they are taking the suitable actions to undermine more falls in the US economy; but the issues comes if they did not, at this moment we would see an enormous crash for the US dollar to levels not seen in ages. So a vigorous movement in the USD/JPY is really predictable, but would it be in favor of the US dollar or not this is the question!
With profit taking transactions still taking place, after we saw the new all time high early yesterday in the Asian session, coming out as reflection to the sever drop in the US dollar to 95.80 levels against the yen, after the emergency cut to the discount rates with 25 basis points. At this time the gold ingots are trading at $998.40 levels recording a high of $1003.50 per ounce, showing some cautiousness in markets, reluctant to take actions believing that later today new updates would change the overall picture in the markets.
Though on the other hand, crude an important commodity in hedging against inflation, yesterday faced some fluctuation moving up and down, reaching the $110 levels then in about two hours it dropped down with more than $4 on Monday, but rising up today at the early Asian trading session to $106.43 per barrel; whereas investors started changing their inflation hedging believing that recession in the US economy, the world's largest oil consumer, would decrease the over all demand obligating oil prices to drop down rather recording all time highs at the time the US dollar is still heading to the downside with no chance of a correction.
So the issue here is whether the shiny and the black metals will hold on the proportional relationship between them, as both metals are considered to be a hedging technique from instability in markets and against inflation respectively.