We have a super Thursday in the cards today, with the Bank of England announcing an interest rate decision, its monetary minutes as well as an inflation report, all at the same time, followed by a press Conference by Mark Carney. In the US jobless claims will steal the show in the afternoon. Last night, and as expected the FOMC kept rates unchanged, and with no major changes in its statement, still managed to hint to a December rate hike, by mentioning that the case for a rate continued to strengthen. It now looks that a rate hike in December is a done deal, unless the FED changes its mind in case the US election causes chaos in the financial markets. Traders were pricing in a 72 percent likelihood that the Fed will raise interest rates in December, according to the CME Group’s FedWatch Tool.
Currencies: The Dollar continued to weaken against most currencies yesterday, before and after the FOMC meeting. This is mostly related to concerns that a possibility still exists that Donald Trump will win the elections next week and as such, some investors are pricing in a possible victory for him. EURUSD reached 1.1125, its highest since October 11th, while the GBPUSD reached a high of 1.2362 from 1.21 just a week ago. The Mexican peso, considered a barometer for Trump’s campaign due to that candidate’s promises to halt immigration and toughen trade relations, fell to more than 1-month lows against the USD. Lastly, USDJPY continued its 3-day slide, reaching 102.52, a 1-month low.
Stocks: Overnight, US stocks were once again lower with the Dow Jones -0.65%, the Nasdaq down -0.93%, and the SP500 -0.65% This was the 8th consecutive decline or the Nasdaq. Things were equally ugly in Europe with the DAX and FTSE posting multi month lows. It looks that until this election is over, volatility will still remain the name of the game.
Oil and Gold: Gold inched higher yesterday, on the back of the US election jitters as well as a weak dollar. The price of the yellow metal reached $1307.85, its highest since a month. Oil prices declined further with WTI and BRT prices dropping below $46 and $47 per barrel respectively after EIA inventories revealed an increase in 14million barrels in stock.
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