Global stock markets had another mixed day yesterday ahead of tonight’s FOMC, the US markets were mostly on the back foot although Apple reporting that it is hitting its revenue targets after the bell has given futures and the Asian open a boost. Brexit took another step last night, in which direction remains to be seen, with the UK parliament voting to reopen negotiations with the EU. The pound dropped off as the likelihood of a deadline extension moved further out, however probably not by as much as some participants were expecting and still remains at relatively high levels for the year. US Consumer Confidence dropped to its weakest level since mid-2017 as the recent government shut down came into play as well as global influences although the dollar remained relatively steady, DXY at 95.80 on the US close. Oil rose on concerns that US sanctions on Venezuela could hit supply with WTI back above $53/b and Brent back above $61/b.
Today could be a crucial day for financial markets with the US-China trade discussions set to open in Washington and then the FOMC delivering it’s latest rate announcement and statement. Investors are hoping for a positive outcome from the talks and Steven Mnuchin lifted some players hopes by declaring that ‘Everything is on the table’ and that the US could lift tariffs on China, however once again the market will be looking for solid progress before a real rally can take place. The Huawei issue got little comment from China yesterday although it’s a factor that could come into play in Washington tonight whether it’s mentioned directly or not. The FOMC are expected to remain relatively neutral with no rate change expected and a ‘wait and see’ message from the statement with a possible continued dovish leaning.
Looking ahead to todays trading and Australia’s latest CPI data is due out this morning. Market expectation is for at 0.4% QoQ print and 1.7% for YoY, anything disappointing will add to more dovish expectations for the RBA and put further pressure on the Aussie dollar. Its relatively quiet for the rest of the trading day in terms of tier 1 data until we hit the FOMC at the end of the New York session, although expect plenty of potential volatility with Brexit a major focus for UK and European markets and anything from the trade negotiations likely to move markets later in the day.