NY Open: FOMC will ignore Trump tweet

The Federal Open Market Committee will likely ignore President Trump’s latest hostile jab about their policy. He tweeted: “It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!”

FX traders took his latest tirade in stride and ignored it. As will the Fed chair Jerome Powell, as his term as board member doesn’t expire until 2028. Vice chair Richard Clarinda’s term goes until 2022. Trump’s tweet will not dissuade the Fed from raising rates on Wednesday.

The Dow Jones Industrial Average led Wall Street lower at the open, but prices are off their worst levels. The DJIA was down 270.59 points as of 14:00 GMT. Sentiment is modestly negative ahead of Wednesday’s FOMC meeting due to a rash of media reports talking about “bear” markets and the risk of a US government shutdown at the end of the week. Weaker than expected New York Empire State Manufacturing Index (Actual 10.9 vs forecast 20.0), while not a major indicator, added to the negative equity market sentiment.

FX trading is subdued. The US dollar retreated against the major G-10 currencies since the open. USDJPY dropped from 113.31 to 113.01 as US Treasury yields inched lower. EURUSD inched higher and is threatening to break above hourly downtrend line resistance at 1.1355, which if successful would target 1.1400. 

GBPUSD continues to be a Brexit basket-case, and New York traders appear reluctant to get involved. USDCAD avoided defied the greenback selling pressure and rallied, supported by renewed oil price weakness. WTI oil dropped from the opening level of $51.67/barrel to $51.06 before bouncing to $51.23 as of 13:50 GMT.