Gold has firmed modestly intraday, but remains well contained within the recent range. A number of important events and data releases are slated for this week, which seems to have tempered risk appetite somewhat.
We’ll get policy announcements from the BoJ, Fed and BoE this week on 31-Oct, 01-Nov and 02-Nov respectively. The BoJ is likely to hold steady on the heels of Abe’s resounding elections victory. The Fed is expected to hold steady. The BoE may hike by 25 bps to at least reverse out the post-Brexit emergency rate cut.
The Fed policy statement will be closely watched for any indication about ongoing concerns about the absence of inflation. Today’s PCE data for September showed that inflation remains below target, which is the precise reason they did not tighten in September.
With a December rate hike fully priced in, arguably the risk is toward a more dovish statement. Will there be verbiage in the statement to rattle the conviction of the hawks? There is no press conference scheduled for this FOMC.
The White House has confirmed that President Trump will be making his nomination for Fed chair this week, reportedly on Thursday. Odds have seemingly shifted in favor of centrist Fed Governor Jerome (Jay) Powell.
The House is also expected to release the details of its tax cut legislation this week. Will those details be sufficient to keep the stock market bubble inflating, or will this be a classic case of ‘buy the rumor, sell the fact?’ And perhaps most importantly, what will be the implications for the national debt, bearing in mind that the debt ceiling comes back into play on December 4.