Fed keeping options open

29 July, 2015

The two-day FOMC meeting concludes today with the focus on the statement released at 18:00 GMT. There is no real anticipation that policy will be changed, but the focus will be on the extent to which the statement indicates a tightening to come and possibly as early as September. Bear in mind that when the Fed dropped the phrase “considerable period” (in relation to how long rates will be kept low) back in January of this year, they were stepping back from offering more structured forward guidance. As such, it would be surprising if they offered specific guidance indicated a near-term move, especially given the recent developments in global stock markets. The dollar has been in retreat in recent sessions against selected majors, but still gaining vs. most emerging market currencies.

The overnight session has been relatively subdued. We are seeing the kiwi higher on the back of the latest comments from RBNZ Governor Wheeler, who suggested the pace of easing would be more subdued than the market was anticipating. This allowed the kiwi to move back above the 0.67 level, with AUDNZD briefly touching the 1.09 level. As with the RBA in Australia, he continues to believe his currency is overvalued, but the markets currently choosing to brush this view under the carpet. We’ve seen some stability in Chinese stocks overnight, which has supported a more stable tone to stock markets in Asia. The dollar’s more recent downward reversal against the commodity currencies has also continued, USDCAD moving back below the 1.30 level, whilst the Aussie has recovered from the year’s low made earlier in the week at 0.7257.


Source  
OPEC considering deeper cut to oil production

Global oil-producing group OPEC and its allies are meeting in Vienna, with expectations raised over whether the alliance will make further cuts to its output...

Peaked trade optimism?

Throughout the past week, the US dollar has received support after strengthening expectations that the Fed will take an extended break after three consecutive rate cuts...

Russel 2000 doesn't support S&P500 optimism

S&P500 closed Monday at historical highs, adding 0.55% on the day close. Both expected new Fed interest rates cut and possible...


Oil drops on weak corporate data out of China

Oil prices fell on Monday after strong gains last week, as data released in China reinforced signs that its economy is slowing, though progress...

Market Sentiment Hinging On Progress In Brexit

The British parliament will vote on the Brexit agreement today at 18:00 GMT. In theory, this should be a simple vote, with a definite...

Market shows demand for yielding assets

The market shows demand for yielding assets, which in turn supports demand for the stocks and currencies of emerging markets. The main...


Yuan and Dollar as a weapon in trade wars

The US Nonfarm Payrolls on Friday could even be called boring: the report showed the preservation of a completely healthy labour market...

Disappointment with Fed and tariffs

Trump announced 10% tariffs on Chinese goods worth $300 billion since September 1, thus ending the US-China trade truce after disappointingly...

Fed pushes down stocks

Markets have started the week under pressure. Expectations that the Federal Reserve will cut interest rates by 50 points in July collapsed...