Depressing developments in European politics is a major cause for worry, all traders are now focused on FOMC updates.
Summary: Global equity and forex markets are seeing divided price action today as investor sentiment towards risk assets was divided on geopolitical cues stemming from the local market. In the Asian market, Hong Kong, China, and Indian markets saw positive price action while other major markets such as Japan, Australia, and Singapore saw major benchmark indices and key equities decline sharply on account of caution ahead of today’s FOMC meeting and interest rate decision.
As the trading session progressed further into European market hours, benchmark indices and key equities in Europe saw positive price action, but investor risk appetite took a nosedive on account of latest political and Brexit developments which weighed down Euro considerably. In the forex market, USD remained steady while the Australian Dollar and Japanese Yen saw dovish price action ahead of Fed meeting later today.
Precious Metals: Rare metal market is seeing divided price action today. As risk assets remained relatively positive albeit unfavourable developments in European political issues, demand for silver remained low. But caution ahead of Fed meeting and increased no-deal Brexit odds underpinned Gold.
Crude Oil: Crude oil, also known as Liquid gold saw further steep declines in both major international benchmarks today. Saudi Arabia’s comments reassuring plans to bring oil production back to full capacity came as serious blow to crude oil bulls acting as a trigger for today’s declines.
AUD/USD: The pair is trading in red as macro data suggested that the Aussie economy is moving at a pace below expected trend causing the pair to decline to fresh intra-day lows. But the pair has since recovered from intra-day lows while still remaining in red ahead of US FOMC update.
On The Lookout: The main focus of traders across the globe on today’s docket is updated from FOMC on their interest rate decision and stance on stimulus measures. However, events ahead of FOMC press conference and interest rate decision update had put forth plenty of stuff for investors to think about which are likely to keep them occupied for the rest of the week. Euro – the common currency of European nations took a serious blow as Italian Prime Minister Giuseppe Conte resigned ahead of no-confidence vote putting the future of nation in jeopardy.
Conte’s move to resign before vote makes the market second guess their opinion on the total number of MPs in favor of and against his views making the upcoming political developments an interesting event to wait for. Further, comments from France on the expectation of no-deal Brexit also increased uncertainties and market worries while comments from German Chancellor Angela Merkel stating that EU will think about practical solutions regarding backstop provided some level of reassurance. Trade talks between Sino-U.S. representatives on deputy levels are set to begin tomorrow which is another event to look out for in immediate future.
Trading perspective: Forex market is likely to continue divided action in early North American market hours while macro data updates provide short term profit opportunities. However, FOMC interest rate decision update set to release in Mid-North American market hours is major event today and likely to provide directional bias for forex market which will remain steady for the rest of the week. Aside from FOMC event, traders await release of FOMC economic projection, EIA crude oil inventories, Housing starts and building permits data from US macro calendar and release of Core CPI data and Common, Median and Trimmed CPI data from Canadian macro calendar. US stock and index futures which are trading in the international market saw dovish price action ahead of Wall Street opening on caution ahead of today’s fed meeting which suggests US Wall Street is likely to see subdued opening today.
EUR/USD: The pair is trading in red across Asian and European market hours today. EURO bulls are under pressure from multiple fronts such as dovish CPI data, uncertainties stemming from Italian politics and latest developments in Brexit proceedings. Traders now await US macro data for short term profit opportunities.
GBP/USD: The pair is trading in red despite the prevalent risk on the trading environment in the European market as GBP came under pressure from increasing no-deal Brexit odds from France and worse than expected outcome in UK macro calendar data. Traders now await US macro data for short term profit opportunities.
USD/CAD: The pair is trading mostly flat with overall price momentum and bias slightly in favor of US greenback. The upside move is influenced by commodity-linked currency Canadian Loonie’s weakness over consecutive sessions of decline in Crude oil price in the international market. Traders now await the US and Canadian macro data updates for short term profit opportunities and directional bias.
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