Markets are awaiting today’s policy meeting at the US Federal Reserve, although the Fed is not expected to change rates or make any other major moves.
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- The US Federal Reserve will be holding a policy meeting later today, at which it is expected to leave rates unchanged and to say little else. Markets have priced in a 98% chance that rates will be left unchanged, so a rate cut would be a huge shock and would likely send the Dollar tumbling and stocks soaring (at least over the short term) were it to happen.
- There will be releases today of US ISM Manufacturing PMI and JOLTS Job Openings data, plus the ADP Non-Farm Employment Change forecast.
- The USD/JPY currency pair rose strongly yesterday to trade well above the big round number at ¥151 not far from the 30-year high price made last year, but then fell back after Japan’s currency diplomat Kanda said he would not rule out any steps to respond to disorderly FX moves and that he remains on standby for intervention “if needed”. Despite this, this currency pair especially, and the Japanese Yen in general, will remain interesting to trend traders. In the Forex market since the Tokyo open, the strongest major currency has been the New Zealand Dollar, while the Japanese Yen has been the weakest. The EUR/JPY currency cross has also reached a new long-term high.
- The USD/CAD currency pair reached a new 1-year high yesterday, bolstered by a strong US Dollar and declining crude oil prices.
- The prices of some soft commodities have continued to rise significantly, with Cocoa futures reaching new long-term highs the day before yesterday.
- Gold has risen very strongly over the past three and a half weeks on risk-off sentiment, breaking its usual positive correlation with stock markets, which have mostly weakened meaningfully over this same period. However, the price has cooled off and remains stuck below the big round number at $2,000. It is the all-time high at $2,070 that looks to be the most technically significant level. I will look to get involved on the long side if we get a firmly bullish daily close above $2,070.
- US CB Consumer Confidence and Employment Cost Index data both came in higher than expected, suggesting a still-buoyant US economy.
- The New Zealand Unemployment Rate remained unchanged yesterday at 3.9%.
- The price of Crude Oil has continued to weaken, as it seems that despite Israel’s ground invasion of Gaza, the war has yet to widen, triggering more optimism that this war might be contained.
- It is a public holiday today in France and Italy.
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