Markets had a relatively quiet day again yesterday as investors look ahead to today’s Fed rate announcement and concerns increase on the potential trade agreement between the US and China. Global stock markets had a mixed day with European bourses having the best of it and US indices closing close to flat on the session. The dollar continued its drift lower but momentum seems to be waning on the move as volatility across the majors continues to fall. Commodities also had a bit of a breather with the notable exception of Aluminium which surged to fresh yearly highs after a tech attack on Norsk Hydro. Oil hovered near recent highs, WTI trading at $59/b and Brent just north of $67.50/b and Gold dropped back after breaking again through 1310 earlier in the day.
It’s been a very quiet week for currency traders so far with even sterling remaining relatively controlled within a big figure range, however the market is poised for potential break out trades if the FOMC surprises later today. The dollar has pulled back from yearly highs earlier in the month as global trade concerns receded and equity markets continued to move higher on the back of more dovish outlooks from central banks across the globe, led by the Fed. However today’s trading sessions could provide a turning point on both counts, news from both China and the US on the trade deal once again seems to lack consistency which could lift levels of concern for investors and, if the Fed isn’t as dovish as the market expects with regard to the dot plot or comes across with a slightly more hawkish message then we could see some serious corrections across the major pairs.
Looking ahead at today’s trading sessions and it really is all about the Fed with the rate announcement, statement and press conference all scheduled for later in the New York day. No rate change is widely expected but as indicated above any change from them will affect global markets across the board. It’s relatively quiet across the Asian session in terms of data releases but investors will once again look to the UK on the London open with the latest CPI data due out as well as any fresh Brexit updates.