The Fed keep interest rates on hold last night as was widely expected across the markets, they did acknowledge the recent pike in inflation and are happy with their gradual rate rises. The dollar had a brief dip but has then resumed it’s recent grind to the topside with the US 10Yr back around 2.97%. This hold pretty much guarantee’s us a rate hike in June from the Fed with most participants feeling another will follow in December, but it also leaves the possibility of another one in between if inflation starts to really heat up, market participants will be watching all upcoming data – starting with tomorrows NFP’s and Earnings numbers for any indication of this.
Elsewhere in the market, the UK at last had some positive data as Construction PMI beat expectations and the Euro continued it’s move south under 1.2000 with poor GDP data contributed to the move.
Looking ahead to today’s trading and its quiet in terms of fundamental data in the Asian session with little in the way of tier 1 releases and with Japan on holiday. The focus will turn to and headlines generated by the US – China Trade talks starting today in Beijing. Both sides have recently played down expectations of a major breakthrough and investors will be wary of the downside risk of any harder negotiating tactics coming to the fore.
Into the London session and traders will once again look to the sterling as the UK Services PMI numbers are due, this is followed into the New York session by the Canadian Trade Balance and the US ISM Non-Manufacturing PMI data.