The Federal Open Market Committee plans to release a statement at 2 p.m. after a two-day meeting in Washington, and Bernanke is scheduled to hold a press conference at 2:30 p.m. Most markets are quiet in front of this key announcement.
Equities: The SEP13 E-mini S&P 500 futures are almost at unchanged levels this morning, in front of a very closely watched (as usual) FOMC statement and Bernanke press conference. This market is trading down .5 points to 1644.75. One of our key pivot levels is 1643. If the market can stay above here, we believe buyers could bring this market up to our next short term target at 1664. If the market heads lower and stays below 1643, we look for the next support level of 1623 to be approached.
Bonds: The bond market is weak across the board. The MAR16 Eurodollar futures are down 3.5 points to 9860.5. We believe this market has a big downside move potential, and we look for the spike low in the high 9830′s to be approached, especially if the statement clearly indicates tapering will take place over next few meetings. The SEP13 30yr bond futures are trading near their daily lows this morning, and this market is below a key market profile level of 139’12. We could see this market heading lower today. If the Fed is very dovish, and uses language to indicate the stimulus will be kept until conditions warrant otherwise, we could see the Eurodollars and bonds reverse course and experience some short covering.
Currencies: The Aussie dollar has been volatile recently, and today it is up 51 ticks to 94.80. We have some minor resistance at 95.00. We believe the Aussie is in a sideways, consolidation period. We also continue to believe that the Euro is in a bullish environment, as Draghi has indicated a potential recovery later this year. We believe the Yen will at some point head lower again as well.
Commodities: Gold is experiencing minor short covering this morning in front of a big FOMC announcement. JUL13 wheat is up $.15, while DEC13 corn continues its hot streak, trading up $.07 to $5.57. Crude oil could not stay above the $99 level, and is down $.17 today to $98.26. Crude has been very bullish recently, making a steady climb through the 90′s this month. We focus more on Sugar. Sugar has had a nice rally from the $.16 level on news that the U.S. government will buy sugar on the domestic market in an effort to push up prices and avoid a larger bailout later.