The U.S. Dollar is trading in mostly quiet ranges overall as markets eagerly await the Federal Open Market Committee monetary policy announcement and presser at 2PM.
Overview
After much speculation, we are now entering a period of guidance, hopefully, for the remainder of the year. The back and forth throughout the year about what is more important to tackle, whether it is inflation or a stagnant economy will finally be officially determined. Markets seem split about future cuts with many hoping for a message of alleviation to come after today while others feel there is indeed a risk that the Fed does not deliver the desirable “dovish” take. Equities will face plenty of volatility and we will monitor surprises in FX if there are any.
An underlying theme for today will also be the Fed’s independence as we expect reaction from the administration about the policy decision. Economic goals have been recently tied to the idea that loose policy can align so expect questions about the Fed’s will to aid the economy beyond just keeping a balanced financial environment. All the questions investors and traders have may be answered, but we foresee caution. As far as Housing, data released earlier this morning showed August Housing Starts and Building Permits contracted more than expected.
What to Watch This Week…
- Bank of England Tomorrow
- Monex USA Online is always open
The complete Economic Calendar can be found here.
GBP ⇓
The Canadian Dollar may be due for some depreciation after 9:45am when the Bank of Canada states its monetary policy decision. Officials are expected to slash interest rates and make a case for keeping support for an economy that has faced a variety of issues. June’s measure of Gross Domestic Product growth revealed a (-0.1%) contraction for the month. It would be a surprise if Tiff Macklem, BOC Governor, exudes any confidence or “hawkishness.”
EUR ⇓
The Euro is losing a little bit of ground following inflationary gauges that showed price growth was milder than anticipated. Consumer Price Index for August in the Euro-zone only advanced by 0.1% thus bringing down the annual average from 2.1% to 2.0%, right where European Central Bank members want it. It is possible that with inflation tamed there may be more comfort amongst the group to slash interest rates at the October 30th ECB meeting.
