Markets steadies in anticipation of the US Fed meeting on Wednesday.
The Japanese’s trade balance numbers of ¥248.3B released
earlier for August came in higher than expected of -¥37.5B, and better than the
prior read of ¥10.9B. Nevertheless, this data did have any noticeable effect on
the Japanese yen against major currencies.
Equities
Global stock
markets closed higher on Tuesday thanks to
positive Chinese data. However,
Asian markets on Wednesday looked more cautious anticipating the Fed meeting on
Wednesday.
Investors are
taking into account market risks such as the US elections, a potential no-deal
Brexit, and the delay of the Coronavirus vaccine, even though the president
Trump said that the jab may be ready within few weeks.
|
Stock Market |
Change % |
|
+0.5 % |
|
|
-0.01% |
|
|
+1.2% |
|
|
-0.08% |
|
|
-0.1% |
|
|
+0.8% |
|
|
+0.2% |
Currencies
The US Dollar index remained flat as investors wait for
the Fed meeting on Wednesday. No change in the current monetary policy is
expected, yet the market’s observers would be following the central bank’s
growth and inflation projections, and of course the unemployment rates.
Additionally, they will pay attention to the Fed dot plot diagram and whether the
Fed members’ have changed expectations for the US interest rates in the coming
years.
EUR/USD saw little change keeping and remained
in the current trading zone 1.1713 – 1.1909. The technical outlook remains
neutral while the pair continues below 1.1909.
GBP/USD
steadied this week after losing over 3% of its value last week due to Johnson’s
controversial internal market bill that breaches in part of it the UK commitments
in the EU/UK exit treaty. With that said, we still think that both would agree
eventually, due to the expensive bill they must pay in the hard Brexit
scenario. From a technical point of view, a close below 1.2773 would change
Cable’s technical outlook to negative.
Commodities
The oil price
has traded higher for the second day due to a disruption in the US oil supply
caused by hurricane Sally. The US Crude rose by 3.2% and Brent oil rallied by 2.5% on Tuesday, both
markets extended their gains on Wednesday due to reports that the outage may
continue for several days.
Gold rallied to a near two-week high on
Tuesday then pulled back as investors preferred to wait for the Fed meeting
before pushing the yellow metal in a clear direction. From a technical point of
view, Gold’s outlook remains neutral while moving in the current trading zone
$1,921 - $2,015.
Looking Ahead
On Wednesday,
investors will know about the Eurozone balance of trade for July at 1:00 PM
(UAE time), the Canadian inflation rate
with the US retails sales for August come at 4:30 PM, and at 10:00 PM all eyes
will be on the Fed rate decision and economic projections than the Fed chair
press conference at 10:30 PM.
The Fed Dot Plot Diagram June 10-2020
Diagram
source: The Federal Reserve Projection Materials
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