Video summary
This midweek trading update from Michael Kramer of Mock Capital Management highlights a schedule dominated by central bank announcements rather than significant economic data releases. The primary focus is on the Federal Reserve's meeting on Wednesday, followed by the Bank of England on Thursday and the Bank of Japan on Friday. While minor economic indicators like export prices, retail sales, and jobless claims are expected to be released, Kramer emphasizes that market movements will largely be driven by the policy decisions and forward guidance from these major institutions. The overarching theme for the week is uncertainty surrounding the Federal Reserve's stance, as markets are already pricing in rate hikes but remain unsure of the timing and magnitude, a sentiment that also extends to expectations regarding future actions by the Bank of England.
The analysis of currency pairs reveals how this central bank uncertainty will directly impact major trading pairs like EUR/USD, GBP/USD, and USD/JPY. If the Federal Reserve adopts a hawkish stance with a rate hike and signals further tightening, the dollar is expected to strengthen significantly, potentially pushing the euro down to 1.1350 and the pound toward 1.3280. Conversely, a dovish outcome from the Fed could see the euro rebound toward 1.1700 and the pound rise to 1.3650. Similarly, the Bank of Japan is anticipated to raise rates to combat inflation, which has already strengthened the yen; however, if they signal hesitation or pause their tightening cycle, the yen could rapidly weaken back toward the 160 level against the dollar.
Beyond currencies, the outlook for commodities and equity indices suggests a market struggling with support levels amid rising geopolitical tensions and higher interest rates. Brent crude oil is currently overbought but remains in an uptrend near $112.70, with potential to reach $125 if it breaks resistance, though consolidation is likely needed first. Precious metals show divergent paths: silver is sitting on support around $63 and could drop to $57 if the Fed hawks, but might rally toward $70 if rates stay lower, while gold has been the primary focus recently. Major European indices like the DAX and FTSE are also testing critical support zones, with risks of further declines if these levels break, while US equities like the NASDAQ and S&P 500 face similar pressures at their respective support lines, with upside potential limited unless the Fed pivots to a more dovish policy.
Read the full video transcript
Hi, my name is Michael Kramer. I'm the
founder of Mock Capital Management.
Today is Tuesday, September 15th, and
it's around 400 p.m. New York time. So,
it's not going to be a lot in terms of
economic data the rest of this week, but
it will be a lot of news coming out from
central banks with the Fed Wednesday,
September 16th at 2 p.m. Eastern, and
then we'll be getting the BOE on
Thursday, September 17th, with the BOJ
coming Friday, September 18th, uh, with
their rate announcement. So, there's
going to be a lot of central bank policy
announcements on top of some economic
data, which I don't think is going to be
critically important, especially not
towards these central bank meetings, but
I'll give it to you the data
nonetheless. Uh, for September 16th, uh,
we're looking for export prices to show
an increase of 0.5%,
up from a negative 1.3% month over
month. Uh, retail sales were looking for
a gain of 0.8% better than last month's
reading of negative0.6%.
Retail sales Xauto, we're looking for a
gain of 0.5%
up from a reading of negative0.3%.
For the control group, we're looking for
a gain of 0.4% up from a negative 0.4%.
Uh then on Thursday, September 17th,
we'll be getting initial jobless claims.
And then on Friday, September 18th,
we'll just be getting some industrial
production numbers. uh essentially not
really much market moving activity once
we get through all of the central bank
policy announcements and and when we
start looking around the market and how
it's positioned going into these events,
we already know that the ECB hiked rates
last week. We already know that the
market is pricing in more rate hikes to
come. But we can see that there's
uncertainty regarding what the Federal
Reserve is going to do. uh we've seen
the euro kind of stall out in this area
of support, let's call it between 11530
and around 115 and a half. So, if we
were to get a hawkish Fed on Wednesday
the 16th, if we were to see the Fed hike
rates and signal more rate hikes to come
through the dot plot in the summary of
economic projections, it could result in
the in the dollar strengthening
materially with the EURUSD potentially
slipping all the way down to around 113
a half over the coming days. If uh for
example you were to get a more dovish
Fed or a uh or a Fed that pro provides a
dovish hike, although I'm not sure how
that would work given that the Fed
doesn't want to give forward guidance
anymore. It could result in the euro
strengthening rather materially versus
the dollar potentially moving back up
towards 11680
or so, maybe even going all the way back
towards 117 uh 7. I think the same thing
holds true when you look at the British
pound. The British pound is also in a
very similar position. Now, the markets
are not expecting the Bank of England to
raise rates on Thursday, September uh
17th, but the market is expecting the
Bank of England to potentially hike
rates later this year. And so again, if
you're in a position where you get a a
Fed that's more hawkish than expected, a
BOE that's not as hawkish, or perhaps
dovish, signaling that rate hikes aren't
a done deal, uh then you could result in
in the pound really weakening versus a
dollar potentially moving all the way
back down towards 13280. While if you
were to get again a Fed, a dovish
looking Fed, uh then you're talking
about the potential really, I think, to
go all the way back towards 13650 or so.
Uh and again you can see how the pound
is kind of resting right now. It's
waiting for some sort of direction as it
consolidates around this 135 region. The
big event obviously will be the Bank of
Japan. Markets are expecting the Bank of
Japan to raise rates at this week at
this week's meeting. Uh the market is
also looking for more rate hikes out of
the BOJ. uh potentially coming at an
accelerated pace, which is one of the
reasons why you've seen the yen really
strengthen versus the dollar. Notice
that the yen got through the support
region we had been watching now for a
couple of months at 155, but we were
able to find some support around 152.
This is really the big area of support.
If you see the the Fed, if you see the
BOJ come out with a message where they
raise rates and they indicate that
they're going to continue to be raising
rates uh to bring inflation back to
target uh and and and note and even
notating perhaps that uh a weak yen
doesn't help their inflation fight, then
it could mean that we're talking about a
USD JPY that goes one sub 150
potentially even to around 148 and a
half or so if we were to get a more
dovish outlook. book where the BOJ backs
off. They don't they signal that, you
know, they they pass on raising rates or
they raise rates in the September
meeting and they signal uncertainty
about when the next rate hike is going
to come. I think you could see a rapid
unwind of all the strengthening you've
seen in more recently. I think you could
easily pro I think there's a chance that
you could actually see the yen move
right back towards the 160 level in the
matter of a few days. We have seen uh
Brent oil continue to move higher. Uh
again, we're approaching that 11270
region. We have continued to move up
over the past week. It is worth pointing
out right now that Brent prices have
moved above the upper Ballinger band.
While they have moved back within it the
last couple of days, you can also see
that we are in an overbought condition
with an RSI reading well above 70 at the
peak and right now we're back to 70. So
right now it looks to me like you're
looking at the potential for the trend
to continue. But more importantly, I
think you may continue uh continue to
rise right along that upper Ballinger
band. I think the next area of
resistance for Brent come somewhere
around this 112 to 113 area, which
leaves us only about $2 to $3 worth of
room. But if we were to see the uh if we
were to see Brent prices actually do a
100% extension of the symmetrical
triangle, I think there's a chance we go
all the way up to around 125. I mean,
given a lot of the things going on in
the world, it really wouldn't be
surprising to me to see that type of
thing. The only question is obviously is
the pace because we are overbought
already. We need probably a couple of
days to continue to consolidate. And I
think if that happens, you could
actually form another sort of
consolidation breakout of a bull flag or
a bull penant pattern out of this move
here, which could also lead to um higher
prices. Uh, I thought this week we would
take a look at silver only because we
haven't looked at it in a couple of
weeks and we've been focusing on gold.
The interesting thing about silver is
right now that it's also sitting on
support. If you notice all these things
that are dollar related are sitting on
support. Uh, and again, I think that's
because you have this Fed meeting and
people really aren't sure what the Fed
is going to do and they're waiting for
that direction. Even though markets are
pricing in um you know a Fed rate hike,
they the odds aren't at 100%. So there
is that bit of uncertainty that the
market doesn't know because this is
really the first test that the market
has with Kevin Worsh. But clearly a
hawkish Fed, stronger dollar leads to
most likely higher real yields, uh
higher rates overall probably not going
to be a good thing for silver. Momentum
has been trending lower. You can see
that silver prices, a break of support
in this 62 to 63 area sets up a
potential return to around 57. If for
some reason the Fed doesn't deliver that
hike, silver probably goes a lot higher.
Uh probably holds support at the 63
region, probably even moves back up
towards $70. Uh the DAX has been
struggling. Also sitting on a support
region right around 25,450.
Again, we know the ECB raised rates.
Now, it's going to become a question of
does the euro strengthen or weaken? Do
oil prices continue to go higher?
Certainly, when I look at this pattern,
it looks to me like a consolidation
phase of what is likely to be a
continued move lower? You can see that
we did hit the lower end of the
Ballinger band, but we never really did
get quite oversold. So, I think if we
lose lose support at the 25,450
area, I think there's a potential for us
to fill back in at around 24,950,
perhaps even a little bit lower, 24,430.
I think upside is somewhat limited given
all the geopolitical things going on in
the world, given rising rates in Europe.
uh which means probably the 20-day
simple moving average along with this
area back at the beginning of September
at 26,000 could serve as the first level
of major uh resistance. When we look at
Footsie also sitting on a level of
support, everything this week is about
support levels. Uh again, the market has
largely turned lower here. Um, we also
have uh what looks like again the start
of a potential uh bare flag pattern
that's potentially formed here. If we
were to see the Footsie break down, if
we were to measure this out, probably
suggests we return somewhere to around
10,370.
Also, it's worth pointing out again, we
know that the Footsie likes to trade
with copper. Copper has all of a sudden
started to show some signs of weakening.
Uh and so if copper continues to weaken
uh then there's a chance that the
Footsie is going to continue to weaken
right along with it. So that's something
that you can keep an eye on as we uh
continue to uh move forward. The
NASDAQ's been having a couple rough days
here. You can see that the NASDAQ is
also sitting on an area of support this
week. Uh again, sitting right at this
28,900
uh region. Uh a break of support
probably means we're going to see uh a
test of 28,500.
Uh maybe even a move all the way down
towards 27,640
which was a little minor area of support
from back in early May. Uh a breakout
here potentially moves us back towards
29,600
with the potential all the way back to
30,000. Uh, I think that's going to be
again a little bit more challenging just
given sort of the backdrop that we're
seeing around the world. You also have
what looks like a descending triangle
potentially forming in it. And you are
really seeing some downward momentum
forming on the RSI as well, also
suggesting some bearish uh bearish
viewpoint at this point. Um, but again,
if we can manage to break out to the
upside, we have uh we have some decent
there's some decent room for it to move.
Although I don't think there's uh all
that much room for it to go, especially
if rates continue to rise. If rates
start coming down, that changes the
picture a little bit. You could get a
little more upside potential. When we
look at the S&P, again, very similar
look. You can see we're sitting right on
the lower Ballinger band. Uh also
sitting in an area of what I would call
to be uh a support region uh right in
here. uh 7, not 500 and let's call it
7,580
or so uh is an area that if broken, you
can see that it really thins out very
quickly, we could be looking at uh an
S&P that moves back towards 7475 to
7500. If we do manage to hold support,
we manage to get a rebound, the Fed
doesn't deliver the hike, I think you'll
see the S&P move back towards that 7,740
to 7,800 range. Uh and finally, when we
look at the Dow, the Dow is also showing
signs of weakening more recently. We're
kind of hanging in at support around
52,000. We're looking at the potential
also for the Dow to potentially break
down. Uh the next area of support
probably comes somewhere around 51,560.
If that area breaks and the next region
down probably comes somewhere around
49,600.
On the flip side, if if this holds as
support again and the Fed is doubbish,
doesn't deliver that hike, you could be
looking at the Dow moving right back
towards this 53,50
all the way up to 53,600
or so. Anyway, that's all I'm going to
have for you this week. We'll see you
next. by