FOMC Rate Decision eyed

USD

The greenback traded laterally against its competitors this morning as investors awaited the outcome of the Federal Reserve’s meeting at which it was expected to announce plans to trim its $4.2 trillion in bond holdings. The prevailing caution in markets ahead of the Fed has kept some investors from making sharper adjustments to their positions despite potentially higher tensions over the Korean peninsula following hawkish statements from U.S. President Donald Trump overnight.

On the economic data front, housing starts fell from 1.19 million to 1.18 million while  building permits came in at 1.30 million against the 1.22 million prediction. Import prices also rose 0.6% against the predicted 0.4% increase.

EUR

The common currency managed to continue with the bulls against most of its contemporaries with the exception of the New Zealand and Australia Dollar, as economic data printed positive results. German ZEW economic sentiment index increased from 10 to 17, outpacing the predictions at 12.3 while the current account surplus grew from 22.8 billion EUR to 25.1 billion EUR. The Eurozone ZEW figure increased from 29.3 to 31.7, just slightly under the predicted 32.4 figure. Only the German PPMI is due today with a 0.1% increase eyed. 

GBP 

The Pound Sterling is now adding to its earlier gains following upbeat results from the UK docket, lifting the GBPUSD pair to near 1.3600 handle. The currency gathered extra interest as UK’s retail sales expanded at a monthly 1.0% in August and 2.4% over the last year. In addition, sales stripping the Fuel component also rose 1.0% inter-month and 2.8% on a yearly basis. All the data have come in well above initial predications. Stronger than expected results may revive BOE rate hike hopes, although the rally may be subdued after Carney previously mentioned that they're hiking was mostly due to the rise in global interest rates. 

CHF 

The Swiss currency was in a bit of pickle as risk appetite was prevalent in the markets and there were no major reports out of the Swiss economy. The Swiss National Bank Quarterly Bulletin is due for release today but this doesn't normally lead to big moves for the franc, leaving it sensitive to market sentiment. 

JPY 

The Japanese currency gave in to the bears on risk taking in addition to the lack of top-tier economic data to keep it supported. Traders are also likely adjusting their positions ahead of the Bank of Japan decision this week. As for today, the trade balance is due with a 0.41 trillion yen surplus predicted, up from the earlier 0.32 trillion yen reading. 

Gold

Gold was steady on Wednesday, with investors in wait-and-see mode ahead of the outcome of a two-day Federal Reserve meeting in the United States. Spot gold had risen 0.2 percent to $1,313.50 an ounce. Geopolitical risks tend to boost demand for safe-haven assets such as gold and the Japanese yen. U.S. President Donald Trump escalated his standoff with North Korea over its nuclear challenge on Tuesday, threatening to "totally destroy" the country and mocking its leader, Kim Jong Un, as a "rocket man".

Oil

Oil rose on Wednesday, set for its largest third-quarter gain in 13 years, after the Iraqi oil minister said OPEC and its partners were considering extending or deepening supply cuts to erode an existing global surplus.  Brent crude futures rose 29 cents to $55.43 a barrel by 0800 GMT, while U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 42 cents at $49.90 a barrel.

Economic Calendar (all times in GMT)

• USD Fed Interest Rate Decision (18:00)

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.