Fed Interest Rate Decision on Tap With US- China Trade Talks off the Table

By Kenneth@Xtrade - on September 25, 2018

Relying on various Fed Rate Monitor tools to access the likelihood of another Fed Rate hike on due Wednesday it is noteworthy to acknowledge that nearly 100% of market participants have already bought in the hawkish trends of the USD.  With the expectation of a rise from 2.00% to 2.25% a 25basis point boost. The shook would appear to be if the FOMC is to hold pat for any unforeseen reason. The Caveat is to expect either an upside or downside knee-jerk upon the announcement of the decision.

On Friday China canceled its scheduled meeting with the US to iron out the spat on tariffs. Apparently citing that China will not negotiate with a “knife at its throat”. Thus by Monday, the full arsenal of the 10% on $200 billion worth of Chinese goods was implemented with China retaliating on $60 billion of US goods.

Global Stocks: are wobbly, The Chinese shares contracted while the Japanese rose slightly.

Elsewhere in Europe, EU Shares were modestly bullish, helped by an upbeat German Wholesale Price Index, (WPI) report a leading indicator of inflation of prices. However, the upside is seen in check as the Trade War tiffs between the economies is on the rocks again.

  • Germany30  trades between 12,321.65 – 12,381.82 at 12,373.31 by 07:27 GMT and expected to remain range bound for the rest of the day.
  • France40  ranges between 5,468.91 – 5,492.70 analysts suggest resistance may be capped for the day.
  • Italy 40 rose 0.99% to oscillate 21,382.50 – 21,565.50 gains are believed to be in check henceforth.
  • UK100 runs amok between 7,455.25 – 7,485.25 as UK Minster Starmer voices out their concerns with the Brexit agreement or the worst case scenario leaving the EU with no agreements plagues investors sentiment.

Commodities:

  • WTI crude: prices rose to 4-year highs, amid production limitations and ahead of today’s API report. By 07:27 GMT WTI Oil stood $72.34 up 0.06% ranging between $72.03-$72.41. Further upside has not been ruled out yet.
  • Gold Prices are still dismal to the downside in a range from (1,201.30 – 1,205.00) as the USD continues to firm ahead of Wednesday rate decision. Investors are on risk on mode shunning the safe havens for the time being.

FX Market:
Nearly $3 .8 trillion in daily exchange is seen in this market however lately volatility is not always triggered according to familiar patterns. With Traders anticipating another Fed hike the USD seems to be in an oversold territory however technical indicators give the impression that they are in the comfort zone. Other major should have been bearish to the USD, the EUR, for example, is seen climbing vs the USD/

EUR/USD was at 1.175.4 at the time of print 07:27 GMT ranging from 1.1724 – 1.181.5 up 0.06%

GBP/USD Was under pressure as opposed to PM Theresa May’s Brexit plans faces more scrutiny. The par was seen at 1.3100. Set on a course ranging from 1.3095-1.3125. Any comment from Gertjan Vlieghe a member of the UK’s Monetary Policy committee will be used as a prelude to guiding the short-term trend of the GBP.

Cryptocurrencies: Following a short uptrend for the Crypto arena last week, this week began on the left foot for most of the Crypto as investors seek to capitalize on the upcoming Fed rate

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