NY Open: Forget the midterms – it’s the FOMC that matters
FX Trader, Loonieviews.net
Summary: The US interim elections are grabbing all the headlines though in reality, this week's Fed policy setting meeting is far more important for markets.
The Federal Open Market Committee meeting is what matters. Thursday’s policy statement is expected to repeat most of what was written on September 26. Rates will be left unchanged. The recent string of US data has been mixed to firm but not strong enough to spark another bump in rates. However, the statement could be hawkish enough to raise the odds of a December hike which are currently at 72.1%.
The US dollar has been on the defensive since the New York open. AUDUSD added to its gains after the Reserve Bank of Australia tweaked its growth forecast higher. Sterling has been the stand-out performer in a positive Brexit headline-fuelled rally. GBPUSD climbed from 1.3043 to 1.3094 but retreated to 1.3065 as of 14:00 GMT. UK negotiator Dominic Raab gave a “thumbs up” signal when he left today’s cabinet meeting. His EU counterpart Michel Barnier said he couldn’t say that a deal was close. GBPJPY rallied from 142.85 to 148.24, but as long as prices are below the 14870-90 area, the downtrend from February remains intact.
Wall Street is trading in positive territory. The Nasdaq is leading the way with a 0.64% gain as of 14:00 GMT. Traders do not seem very interested in driving prices very far in either direction and today’s vote gives them the perfect excuse to book an early lunch.