Global Markets:
- Asian stock markets: Nikkei up 0.10 %, Shanghai Composite fell 0.30 %, Hang Seng rose 0.35 %, ASX 200 rallied 0.30 %
- Commodities: Gold at $1264 (+1.20 %), Silver at $16.71 (+1.50 %), WTI Oil at $48.65 (-0.20 %), Brent Oil at $50.90 (-0.20 %)
- Rates: US 10-year yield at 2.28, UK 10-year yield at 1.24, German 10-year yield at 0.55
News & Data:
- South Korea GDP q/q 0.6 % vs 0.6 % expected
- Australia Export Price Index q/q -5.7 % vs -6.3 % expected
FOMC Meeting:
- Fed to start balance sheet unwind ‘relatively soon’
- Repeats that inflation seen rising to 2%
- Says will reinvest holdings ‘for the time being’
- Repeats that overall inflation measures ex food and energy have declined
- No dissents
- Says job gains ‘have been solid’
- Household spending and business investment have continued to expand
- Repeats that near-term risks to the economy appear ‘roughly balanced’ but it is monitoring inflation developments closely
Markets Update:
The US Dollar came under renewed pressure following the FOMC statement. The central bank was more dovish than expected, and lowered its inflation expectations. Market participants are now questioning whether there will be another rate hike this year at all.
EUR/USD broke back above 1.17 and extended gains to 1.1775. There is now little resistance until 1.20, although the pair is already heavily overbought in the short-term. Support is now seen at 1.17 and 1.1620.
GBP/USD cleared resistance at 1.31 and reached a high of 1.3160. However, the Pound is likely to struggle to extend gains given the uncertainty around Brexit and the recent low inflation numbers.
USD/JPY is holding quite well given the broad Dollar weakness, but a test of 110 seems inevitable. Should that level break, a decline towards 108 seems likely.
AUD/USD caught a bid overnight and broke above 0.80 resistance without much struggle. There is now no major resistance until 0.82 and the pair is likely to test that level soon. Positive risk sentiment and rising commodity prices should keep the Aussie Dollar supported in the near-term.
Upcoming Events:
- 13:30 BST – US Core Durable Goods Orders
- 13:30 BST – US Initial Jobless Claims
