– FOMC held rates between 1.00%-1.25%, as expected. FOMC stated that activity is rising at a “solid rate” despite hurricanes
– USD weakened across the board after reports that Trump intends to pick Powell as the next Fed Chair
– Looking ahead, highlights include Eurozone Mfg. PMIs, UK Construction PMI, BoE Rate Decision and QIR, Fed’s Powell, Dudley and Bostic

FOMC

FOMC held rates between 1.00%-1.25%, as expected with the decision made by unanimous vote.

FOMC stated that activity is rising at a “solid rate” despite hurricanes and near-term risks roughly balanced and noted it is watching inflation closely and repeated it sees inflation stabilising at 2% over the medium term. (Newswires)

Note: There were no major developments from the FOMC which was reflected in the muted reaction seen across asset classes, although its categorisation of the US economy was upgraded to expanding at a “solid rate” (versus the previous “rising moderately”), and absent any major shockers, analysts seem content to peddle the ‘December hike remains on track’ narrative – the implied probability nudged up slightly, with markets now pricing in a 98% chance the FFR target will be lifted by 25bps by the end of the year.

ASIA

Asian equity markets were mostly subdued as region failed to sustain the early momentum from US, where stocks printed fresh intraday record levels before some profit taking crept in. Furthermore, a deterioration in sentiment coincided amid a continued pullback in US equity futures due to tax plan uncertainty, with reports now suggesting the plan could include a phase out in corporate taxes after a decade. As such, ASX 200 (-0.1%) finished negative with financials pressured after big 4 NAB announced to drop 6,000 workers. Elsewhere, Nikkei 225 (+0.3%) was indecisive but extended on 21-year highs nonetheless, while Hang Seng (-0.2%) and Shanghai Comp. (-0.7%) were lower after the PBoC skipped its liquidity operations. Finally, 10yr JGBs saw marginal gains as they tracked upside in T-notes and amid an indecisive risk tone in Japan, while the BoJ were also in the market for JPY 710bln of JGBs in the belly to super-long end.

PBoC refrained from open markets today. (Newswires)
PBoC set CNY mid-point at 6.6196 (Prev. 6.6300)

EUROPE/UK

Sir Michael Fallon resigned as defense secretary last night amid suggestions of inappropriate behaviour towards female journalists. (Newswires)

FX

USD weakened across the board after reports the White House informed status quo candidate Powell that President Trump intends to pick him as the next Fed Chair. This benefitted the greenback’s major counterparts in which GBP/USD rose 40 pips to test the 1.3300 level to the upside, while EUR/USD and NZD/USD also saw similar upside. USD woes were also exacerbated following a firmer reference rate by the PBoC, which further underpinned the gains in China-proxy AUD after the currency was initially buoyed by better than expected Trade Balance and Building Approvals data.

Australian Trade Balance (AUD)(Sep) 1745M vs. Exp. 1200M (Prev. 989M, Rev. 873M). (Newswires)
Australian Building Approvals (Sep) M/M 1.5% vs. Exp. -1.0% (Prev. 0.4%, Rev. 0.1%)

COMMODITIES

Commodity prices were relatively uneventful with WTI crude prices unchanged and unaffected by the somewhat bullish OPEC-related rhetoric. Elsewhere, gold prices were mildly supported on the back of USD weakness and copper lacked impetus alongside a mostly subdued risk tone in the region.

Saudi Energy Minister Al-Falih said he expects oil market to continue proving and producers to renew resolve to normalize stockpiles. (Newswires)

Kuwait said it sees oil output cut being announced in Vienna and that the length of extension and other alterations could be announced in Feb-Mar. (Newswires)

OPEC wants to see the floor for oil prices at USD 60/bbl in 2018, according to a source familiar with Saudi oil thinking. (Newswires)

GEOPOLITICAL

North Korea is reportedly working on an advanced version of missile that could reach US, according to reports citing a US official. (CNN)

US

US White House reportedly notified Powell that President Trump intends to nominate him for Fed Chair. (WSJ) There were also reports that US President Trump is to announce Fed Chair nominee today at 1500EDT. (Newswires)

US GOP tax bill said to propose 12% repatriation tax on cash and 5% rate on non-cash holdings. In related news, US House Republicans were reported to be mulling a corporate tax phase out after 10 years, while US House Tax Committee Chairman Brady said that a permanent corporate tax reduction could require several steps. (Newswires)

Source: www.talking-forex.com
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Dollar Index Daily

MPP marks the resistance of the previous range. If this support holds and price heads higher the target for the month is MR2.

Dollar Index H4

Price is currently trading in a range between WPP and MPP. Bearish stoch. Upcoming news will determine direction of the Dollar. Paying careful attention to support at MPP.

US10Y Daily

Price is at the 21 and the support of the previous range. If news favors a more hawkish path ahead for the FOMC, we will see price drop and yields rise. This will bode well for Yen and Gold weakness. MM3/ MPP target MM1/ MS2.

US10Y H4

Price double bottomed last week at the weekly target, made a higher high, pulled back for the higher low and is currently at resistance with a bullish target of WR2 and a bearish target of WS1. Upcoming news will determine direction.

S&P 500 Daily

Price opened at the monthly sell zone with a target of MM1/ MS2. No indication of bearishness yet as price remains above the 21 and has not made a lower low.

S&P 500 H4

On this time frame we can see price is range bound with MM3/ WM3 marking the top of the range and WPP marking the bottom of the range with MPP/ WM2 support below. Stoch is bearish and price is currently at support.

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