Markets pullback after Fed meeting, Eyes on Bank of England rates decision.
The New Zealand economy shrunk in Q2 by -12.4% the read came
in better than the expected -13.3%. The Australian unemployment figures of 6.8%
came in lower than expected of % 7.7% and lower than the prior read of 7.5%.
The Bank of Japan has kept interest rates unchanged on
Thursday at -0.1% and maintained -as expected- ultraloose policy to help the
economy and facilitate fundraising by struggling companies.
The European inflation numbers for August came in line with
expectations at -0.2% but lower than the prior print of 0.4%.
Equities
Global stock
markets retreated due to lower hopes of more stimulus from the US Fed. The US
central bank explained that it could not create demand and pushing the economy
forward required fiscal stimulus which may take place after the US elections.
|
Stock Market |
Change % |
|
-0.3% |
|
|
+0.2% |
|
|
-1.3% |
|
|
-0.09% |
|
|
-0.01% |
|
|
-0.05% |
|
|
-0.1% |
Currencies
The Federal Reserve
has left the monetary policy unchanged and possibly keeping on low-interest
rates until 2024 according to the Fed dot plot. Additionally, the central bank
signaled concerns that the pandemic will continue to affect the economy
negatively. The US
Dollar index rallied on
Thursday to a one-week high at 93.61 however, the price slipped after and
remained to trade in a sideways move.
The Euro has softened due to the US dollar strength on
Thursday however, EUR/USD technical outlook remains neutral while below 1.1909.
GBP/USD
has recovered this week some of last week’s losses caused by Johnson’s
controversial internal market bill that breaches in part of it the UK commitments
in the EU/UK exit treaty. Joe Biden the Democrat candidate to the US elections
warned the UK that it must honor its international commitment with the EU or
there would be no trade deal with the US. From a point of view, a close below
1.2773 would change Cable’s outlook to negative.
Commodities
The oil price
traded lower on Thursday due to reports of US producers prepared to resume
production. The US
Crude dropped by
0.2% while Brent
oil lost around 0.1% of its value.
The Gold price steadied and continued
its sideways move the price may keep pointing higher towards $2,015. While a
daily close below $1,921 could change the yellow metal outlook to negative.
Looking Ahead
On Thursday, markets
will find out more about the UK monetary policy from the Bank of England
meeting at 3:00 PM (UAE time) then at 4:30 PM come the US initial jobless
claims.
The Fed Dot Plot Diagram September 16-2020
Diagram
source: The Federal Reserve Projection Materials
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