Equities Subdued on Fed Meeting Minutes Update, US PMI’s In Focus

Karthik Subramanian

Karthik Subramanian has been a professional trader and fund manager over the last 18 years. He is basically a software developer who made the transition to financial domain around 18 years back as the attractiveness of the financial markets proved too much for him. He lives in Chennai in India along with his wife and son. He began his career as a software developer in 1999 and then gradually moved into the financial industry as he began trading stocks in his pastime. He then moved into the financial markets full time and then shifted his focus to the FX markets due to the liquid nature of these markets. Since then, he has been trading FX diligently and his favourite pair are the EURUSD and EURJPY. Over the last couple of years, he has found blockchain to be of high interest and considering his background in software and finance, he has since assembled a team of highly talented developers who have since worked on a variety of projects like crypto exchanges and blockchain architecturing. Now, he balances his time between trading and commenting on both the FX and crypto markets. He has worked with many publications including FX Street and Finance Magnates, which has helped him gain experience and also recognition across the industry. He loves to write and this passion has helped him to reach out across the FX and crypto industry. Right now, he works on his pet projects in the FX and crypto industry and spends his time writing and managing his blockchain team and helping it to reach higher.

FED

Equities Subdued on Fed Meeting Minutes Update, US PMI’s In Focus

August 23, 2019

Federal Reserve System Fed meetingFed meeting minutes revealed unexpected shift in fed stance causing traders to look for clarity in Jackson hole symposium and fed speech. US Preliminary PMI in focus. 

Summary: Global market today saw key risk assets – benchmark indices, equities, F&O’s trade subdued following unexpected cues from fed meeting minutes released yesterday. The Fed meeting minutes show that contrary to public expectations that interest rate adjustments made in last meeting was start of long term easing, the changes made last time were considered by FOMC members as more of recalibration of interest rate to suit current economic scenario. This threw investors and analysts into confusion, causing traders to take on cautious stance and observe proceedings in the market awaiting fresh directional cues before placing any major bets. Following Asian market’s price momentum, European markets also saw subdued opening in the market today. But better than expected Euro area services and markit composite PMI updates helped investor sentiment gain a bullish edge resulting in comparatively positive price action in European equity market today. In forex market, while Yuan continues to decline owing to prolonged trade war, major global currencies are seeing neutral to slightly dovish activity owing to mixed signals such as declining USD and unexpected shift it Fed stance on interest rate decision. 

Precious Metals: Precious metals continue to trade with slight dovish bias albeit limited declines as prevalent caution in global market and weak USD in the global market today provide some level of support to precious metal bulls keeping safe-haven demand relatively high in the market today. 

Crude Oil: Crude oil is seeing mixed activity, while spot market remains neutral with slight tinge of dovish influence, futures of two major international crude oil benchmarks are trading with positive bias influenced by decline in US weekly Crude oil inventory data which saw draw in both EIA & API stockpile.

AUD/USD: The pair is trading with dovish bias today as cautious investor sentiment influenced by fed meeting minutes update and Sino-U.S. trade war woes weighed down AUD while USD’s decline helped limit loss. However, AUD bulls remain pressured by market bears keeping the pair trading in red. 

On The Lookout: Geo-Political events took the backseat post release of fed meeting minutes yesterday. As Fed meeting minutes revealed that the recent change made in interest rate was more of a recalibration rather than continues series of policy easing while comments from Fed members have been fairly dovish, investors took cautious stance awaiting clarity of Fed’s stance before making major bets. In immediate future, while geo-political events continue to dictate long term price momentum, the price momentum in present and immediate future will be decided based on directional cues gained from Jackson hole symposium later today and Fed Chair Powell’s speech tomorrow. Ahead of Powell’s speech, risk assets are likely to remain subdued on cautious investor sentiment. On release front today, US calendar is set to see the release of Preliminary Manufacturing, Services and Markit Composite PMI while Canadian calendar is set to see release of Whole sales data which are to provide short term trading cues. 

Trading Perspective: Forex market is likely to gain some level off directional bias post Jackson hole symposium update but is likely to remain in familiar levels until Powell speech later tomorrow. US Futures trading in international market in Asian and European market hours traded positive on upbeat earnings reports from retail stocks. However caution ahead of Jackson hole symposium will likely keep gains in check post subdued opening in US Wall Street later today. 

EUR/USD: The pair traded positive earlier in the day as upbeat EU area macro data helped improve sentiment surrounding EURO bulls. But the influence faded shortly as caution ahead of Jackson hole symposium kept risk assets capped resulting in pair declining and hitting fresh three week lows. Traders now await Jackson hole symposium update for short term profit opportunities in NA market hours. 

GBP/USD: The pair is trading positive in late European market hours influenced by German Chancellor Merkel’s comments which eased no-deal Brexit woes. Merkel stated a solution to backstop can be found before Oct 31 boosted GBP bulls helping GBP push the price back above 1.22 handle. Traders now await Jackson hole symposium update for short term profit opportunities in NA market hours.

USD/CAD: The pair is trading in red today influenced by USD weakness and spike in crude oil price in the global market. Canadian Loonie being a commodity linked currency gained strength to push below 1.33 handle and has remained steady below the mentioned price level for major part of the day. Traders now await Jackson hole symposium update for short term profit opportunities in NA market hours.

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