Market Brief: All eyes on Fed’s Jay Powell
Fawad Razaqzada September 18, 2019 12:30 PM
Including those of Donald Trump…
- This is an update as at midday in London. In FX, USD was the top riser while the likes of CHF and NZD were among the weakest major currencies. GBP and EUR also weakened. Among commodities, gold fell on USD strength and crude oil remained on the back foot after yesterday’s reversal. The major EU indices were all in the positive territory.
- Tonight, the Federal Reserve is widely expected to cut rates by 25 basis points. The FOMC is also likely to signal that at least one more cut will be arriving later in the year. The US economy has remained fairly resilient and equity indices near record levels, despite trade concerns and weakness elsewhere in the global economy. This begs the question why does the US President Donald Trump desperately want the Fed to lower interest rates to zero?
- Saudi Arabia says it has "material evidence" tying Iran to the Kingdom’s oil infrastructure attack. The defence ministry will hold a press conference at 17:30 local time or 15:30 BST to reveal evidence on Iran’s involvement in the Aramco attacks that took place on Saturday. Oil prices weakened further this morning after Tuesday’s drop, but still remain comfortably above the closing price of Friday – so the weekend gap has not been entirely filled just yet.
- UK inflation dipped below the Bank of England’s 2% target, falling to 1.7% year-over-year in August from 2.1% in July, the ONS reported this morning. The drop was more severe than 1.8% economists had expected. Core CPI dipped to 1.5% from 1.9%, likewise more than 1.8% expected. The UK’s Supreme Court will continue to examine the legality of PM Johnson’s decision to suspend parliament over the next few days. Meanwhile Eurozone consumer inflation remained unchanged at 1.0%, according to the final estimates by Eurostat.
- European stock markets edged higher after last night’s positive close on Wall Street, and despite a mixed session for Asia as Japan’s markets fell on news exports contracted for the 9th straight month with an 8.2% y/y slump.
- In corporate news, my colleague Ken Odeluga writes:
- Kingfisher dropped as much as 3% after the home improvement retailer reported a 6% drop in underlying first half profits.
- Deutsche Post shares fell 2%, leading declines by logistics groups after FedEx slashed its profit outlook late on Tuesday, citing a weakening global economy and the trade war.
- Germany's Wirecard rose 3.3%, topping the DAX index. The payments group has formalised an agreement with Japan's SoftBank that includes a convertible bond and expansion opportunities.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.