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Breaking news

Federal Reserve Leaves Interest Rates Unchanged, Maintains Monthly Asset Purchases

Real Time News
  • Fed's Powell: - Fear of COVID and unemployment benefits are keeping people from working - Such a high vacancy-to-unemployed ratio is rare
  • Fed's Powell: - We are not looking at raising rates, but instead asset purchases - Ideally you would not be raising rates before tapering
  • @CVecchioFX @RiskReversal @GuyAdami Gold is headed back to the bar for another bender #LowerForLonger
  • Fed's Powell: - Move in yields not pinned on one single factor - Technical factors, movements in real yields shifting bond market
  • Fed's Powell: - In the near-term, risks to inflation are tilted to the upside - If inflation continues to rise above the Committee's goal, Fed will use its tools to guide inflation lower
  • $USD bearish break, now at LOD next support 92.19-92.26 https://t.co/KE2gP6Q1Xs https://t.co/DmMGL9byme
  • Gold and the US Dollar whipsawing in wake of the Fed statement and press conference hosted by Chair Powell. Statement said the economy has made progress toward its goals, but Powell just expounded on this by saying "we are still a ways away from *substantial* progress on jobs." https://t.co/qVy8rpIn86
  • Fed's Powell: - We are not near a discussion on raising interest rates - Economic recovery remains extremely uneven
  • So, either the Fed announces Taper soon and markets will evaluate that through the risk lens or they will have to push it back because they are troubled by economic issues such as the covid risk they highlighted. Either way, serious dancing to keep risk appetite steady
  • Fed's Powell: - COVID waves have less and less of an economic impact as time goes on - We will monitor Delta variant closely
Japanese Yen Soars, Mexican Peso Plummets, Crude Oil Prices Slammed - US Market Open

Japanese Yen Soars, Mexican Peso Plummets, Crude Oil Prices Slammed - US Market Open

Justin McQueen, Analyst

MARKET DEVELOPMENT – Mexican Peso Plunge, JPY Soars, Euro Benefits from Month-End

DailyFX Q2 2019 FX Trading Forecasts

MXN: The Mexican Peso plunged overnight after President Trump surprised markets through announcing that the US will place 5% tariffs on all Mexican goods, further dampening risk appetite, while Mexican exposed stocks (autos in particular) had also dragged equities lower. That said, the 3% drop in the Peso looks to be somewhat stretched with the move exacerbated by heavy long positioning in the currency (net longs highest since 2014).

JPY: The Japanese Yen is the notable outperformer in the G10 space as safe-haven flows support. Subsequently, USDJPY has made a break below the 109 handle with support at 108.50 eyed.

EUR: Despite the drop in German inflation, which raises the risk of softer Eurozone inflation, the Euro is managing to hold firm as month-end buying in EURGBP provides support for the currency, while an unwind of the Euro funded carry trades in the Mexican Peso has also underpinned. Reminder, the Euro had been many traders funding currency of choice when going long EMs. However, gains in the Euro remain limit given the downside risks stemming from the uncertainty around Italy. Of note, the 5-Star party announced that it would support the tax cut plan, which is likely to see the budget-deficit target raised. Alongside this, eyes will be on next week’s ECB meeting with Draghi and Co. set to stick to the dovish script.

USD: The US Dollar has failed to find comfort from the increased trade war uncertainty with the greenback modestly lower, albeit holding onto the 98.00 handle. Elsewhere, yesterday’s speech by Fed Vice Chair Clarida has also kept gains in the USD limited after opening the door to a potential rate cut provided downside risks to the economic deteriorated further.

Crude Oil: Oil prices are once again on the backfoot as souring risk sentiment weighs on the commodity. Consequently, oil prices are now on course for its worse monthly since the November sell-off with Brent crude futures down over 14% for the month.

Japanese Yen Soars, Mexican Peso Plummets, Crude Oil Prices Slammed - US Market OpenJapanese Yen Soars, Mexican Peso Plummets, Crude Oil Prices Slammed - US Market Open

Source: DailyFX, Thomson Reuters

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Japanese Yen Soars, Mexican Peso Plummets, Crude Oil Prices Slammed - US Market Open

How to use IG Client Sentiment to Improve Your Trading

WHAT’S DRIVING MARKETS TODAY

  1. EURUSD Regains Some Strength, Bond Yields Signal a Recession” by Daniela Sabin Hathorn , Junior Analyst
  2. Gold Price Outlook: Bullish Breakout Gathers Pace, Fed Opening Door to Rate Cut” by Justin McQueen, Market Analyst
  3. FTSE 100 Outlook – Looking to Break the 200-day, Pattern Neckline” by Paul Robinson, Currency Strategist
  4. Using FX To Effectively Trade Global Market Themes at IG” by Tyler Yell, CMT , Forex Trading Instructor

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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