Bullet Report: Dollar comes back ahead of FOMC, GBP Collapses under 1.30

This week starts with no major economic announcements for release. On Wednesday however, the long anticipated FOMC rate decision will take place. The Fed is widely expected to hold rates the same. That can be seen also from the fact there is a 12% chance priced in for raising rates, almost the lowest point so far. However, after higher than expected US CPI figures released on Friday, it cannot be excluded that the FED will release a hawkish statement, something which explains the late USD rally on Friday.

Currencies: The USD ended as last week’s strongest major currency, ahead of the FOMC meeting, while GBP ended it as the weakest after the BoE signaled more rate cuts later in the year. US August CPI data released on Friday was stronger than expected with CPI core inflation rising 0.3% m/m vs 0.2% expected and 0.1% m/m in July. The increase in Inflation sparked a rally in the USD which caused over a 250 pip drop for the Pound. The euro held steady at $1.1160, having touched a low of $1.1149 earlier on Monday, its lowest level since Sept. 6. Major currencies showed little reaction to news of three attacks across the United States over the weekend, involving bombings in New York City and New Jersey and a stabbing rampage at a Minnesota shopping mall.

Stocks: U.S. stocks finished lower Friday as weak oil prices pressured energy shares, while anxiety ahead of next week’s central-bank meetings weighed on sentiment. However, for the week, major stock-index gauges eked out small gains, in part, thanks to Apple Inc.’s stellar climb. This morning, Asian shares are trading mostly higher.

Oil and Gold: Oil prices rose almost 2 percent on Monday, after Venezuela said OPEC and non-OPEC producers were close to reaching an output stabilizing deal and as clashes in Libya raised concerns that efforts to restart crude exports could be disrupted. Gold rebounded from Fridays selloff that saw the yellow metal dip to as low as $1306 before bouncing to $1316 at time of writing.

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