The Fed did pretty much as expected on Wednesday in leaving rates on hold and underlining its commitment to do everything within its mandate to help the economy, even as the coronavirus in the US seems to be increasingly out of control. The Fed kept the Fed Funds rate within a 0%-to-0.25% range and pledged to keep rates near zero for some time to come. The Fed Chair was very cautious in his outlook, stating that coronavirus cases and the restrictions aimed at containing it have begun to weigh on the economic recovery, pointing to an apparent pullback by consumers and a slowdown in the rehiring of furloughed workers, particularly by small businesses.
Given the widely held expectations of the Fed statement, the effect on the markets has been relatively muted although the US stock indices did close the session around 1% higher, underpinned by Chairman Jerome Powell declaring that the Fed was “not even thinking about raising rates”.
In the FX markets, the US$ is generally weaker, with the DXY ending the session down by around 0.5%, with much of the move coming ahead of the meeting as traders anticipated the dovish outcome.
The metals are higher again with Gold having briefly made a new all-time high at 1981. Silver had another wild ride in rising to 24.95 and then falling to 23.30 and spiking back to 24.25, where it currently sits, all within the space of 20 minutes. WTI had another tight session – with just a 60 cent range, seemingly ignoring all that is going on around it!
Looking ahead, Thursday is set to be the busiest day for the calendar this week, beginning with the NZ Building Permits (exp 0.0%mm – June), Business Confidence (exp -29.8) and Activity Outlook (exp -6.8%) along with the Australian Import/Export Index and June Building Permits (exp 0.0%), while the Japan June Trade Data (exp -6.5%mm) will also be on the agenda. European Trade will see the Preliminary German Q2 GDP (exp -10.9%qq, -9.0%yy), June Unemployment (exp 6.5%, +45K), CPI/HICP (CPI, exp 0.3%mm, 0.6%yy; HICP, exp 0.6%yy) and the EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment and Business Climate. The US session will see the Preliminary Q2 GDP (exp -34.1% annualised), the US Personal Consumption/Expenditure figures and the weekly jobless claims (Initial exp +1.45 mio/Continuing 16.2 mio).
In terms of corporate results, Thursday is set to be a big day, with Q2 earnings to come from Apple, Amazon, Facebook and Google.
Have a good day.
Economic data highlights will include:
Thur: NZ Building Permits, Activity Outlook, Australian Building Permits, Import/Export Index, Japan Retail Trade, German Q2 GDP, Unemployment, CPI/HICP, EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate, US Preliminary Personal Consumption/Expenditure, Q2 GDP, weekly jobless claims
Market moves, in brief:
FX: DXY 93.26 (-0.48%)
Bonds: US10Y; 0.580% (-0.70%), German 10Y; -0.498% (+2.33%), UK 10Y; 0.118% (+11.60%), Australian 10Y; 0.888% (-4.82%), NZ 10Y; +0.834% (-2.57 %), China 10Y; 2.955% (+0.56%)
Stock Indices: DJI; +0.61%, S+P; +1.24%, NASDAQ; +1.35%, EUStoxx50; -0.10%, FTSE100; +0.04%, Shanghai Composite; +2.09%, ASX200SPI: +1.08%
Metals: Gold $1970 oz (+0.62%), Silver $24.28 oz (-0.48%), Copper $2.9335 lb (+0.55%), Iron Ore $107.10 per tonne (NYMEX) (-0.66%),
Oil: WTI $41.30 pb (+0.40%)
|INDICES / COMMODITIES|
|1 Hour||Bearish Divergence||Turning Higher||Possible Topping Formation||Turning Lower||Turning Neutral||Turning Neutral|
|4 Hour||Bearish Divergence||Possible Basing Formation||Up||Bullish Divergence||Turning Neutral||Turning Neutral|
|1 Day||Up||Turning Lower||Turning Higher||Down||Neutral – Turning Higher?||Turning Neutral|
|1 Week||Turning Higher||Neutral – Turning Lower?||Neutral – Turning Higher?||Turning Lower||Up||Turning Higher|
|1 Hour||Bullish Divergence||Up||Turning Higher||Turning Higher||Turning Higher?||Neutral|
|4 Hour||Bullish Divergence||Neutral||Turning Neutral||Possible Topping Formation||Possible Topping Formation||Turning Neutral|
|1 Day||Down||Turning Neutral||Turning Neutral||Up||Up – Overbought||Turning Neutral|
|1 Week||Turning Lower||Turning Higher||Up||Up||Up||Up|
|1 Hour||Turning Higher?||Neutral – Turning Higher?||Turning Neutral||Neutral||Turning Neutral||Turning Lower|
|4 Hour||Turning Neutral||Turning Neutral||Neutral – Turning Higher?||Turning Neutral||Turning Neutral||Up|
|1 Day||Possible Topping Formation||Turning Neutral||Neutral – Turning Higher?||Turning Neutral||Turning Neutral||Neutral – Turning Higher?|
|1 Week||Neutral – Turning Higher?||Neutral – Turning Higher?||Turning Lower||Turning Higher?||Turning Lower?||Turning Neutral|