Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
FED Disappointed Markets
Information is not investment advice
Midday Market View
Europe’s auto stocks were on the skids again on Thursday after fresh data showed that the recovery in sales had gone into reverse in August. U.S. stocks are set to open sharply lower Thursday, with investors disappointed that the Federal Reserve decided against adding more stimulus to advance its goal of spurring inflation. Congress continues to struggle to reach a deal on a new coronavirus aid bill although President Donald Trump has injected some life into talks and thus some investors had hoped the Fed would carry out more of the heavy lifting by injecting more monetary stimulus. Oil prices fell Thursday, rebalancing after recent strong gains as producers in the Gulf of Mexico took steps to resume output in the wake of Hurricane Sally.
Midday Key Point
- Eurozone August Final CPI comes at -0.2% vs -0.2% y/y than expected
- EUR/GBP finds support ahead of BoE
- EUR/USD finding support at daily trendline
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.