The Big Day is finally here. FOMC rate decision will be the major market focus today and its theme tonight will set the direction for the next few days. The Fed is expected to not raise rates today, however there are a few other things that could move the market. Firstly, the conference following the actual rate decision, will give hints as to a possibility of a December hike which currently stands at 60^. Secondly, the Fed will release its update economic projections including inflation expectations, growth and unemployment data. Overnight, the other major event, Bank of Japan’s rate decision, created a lot of volatility even if they kept rates unchanged.
Currencies: The USDJPY surged after initially taking a dive of 100+ pips. The pair dropped 100 pips as low as 101.00 before rebounding to over 102.50 on news that the BoJ has introduced open ended operations (basically intervening in the market to boost up inflation). The GBPUSD continued its streak of huge losses yesterday as the pair dropped to 5 week lows of 1.2943. GBP/USD plunged 250 points, after the release of US consumer inflation numbers, which were better than expected. CPI posted a gain of 0.2%, edging above the forecast of 0.1%. Overall the USD Index has gained yesterday and today by 0.25%.
Stocks: Japanese stocks are on the rise following the decision of BoJ to maintain its -0.1% interest rates unchanged. Nikkei surged 1.72% while other Asian markets remained mixed. In the US, stocks gained initially but closed the day flat as traders grew cautious of tonight’s Central Bank Decision.
Oil and Gold: Oil prices rose supported by a draw in US inventories. WTI crude futures were up 1.8 percent, or 77 cents, at $44.82 a barrel at 0251 GMT. Brent crude oil futures were trading at $46.45 per barrel, up 57 cents, or 1.2 percent, from their last close. Gold prices are generally under pressure, however the yellow metal seems to bounce every time it approaches $1308 and be sold when it nears $1308. Knowing this, traders should continue to monitor these values as support or resistance going in to tonight’s FOMC rate decision.
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