Fed meeting keeps markets quiet and intrigued

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Fed meeting keeps markets quiet and intrigued

JULY 31, 2019

The U.S. Dollar is simply flat ahead of a major event in the form of the Fed’s decision announcement this afternoon at 2 o’clock.

Overview

Indeed, the most awaited piece of monetary policy action will provide us guidance and set the dollar one way or the other. The Fed has indicated they are headed toward interest rate cuts because they deem it could help in preventing the economy from cooling off.  Naturally, this should cause a weakening in the buck’s value, but we shall see if it has a significant impact that can be sustained as other regions also claim the need to look at easing measures such as lowering rates.

ADP Employment Change this morning revealed an addition of 156K payrolls, once more solidifying the labor sector’s steadiness. A clearer picture will, of course, come in the form of Non-Farm Payrolls as we get ready for the Employment Situation on Friday. The Fed’s Chairman Jerome Powell will commence his press conference at 2:30 pm.

What to Watch Today…

  • Fed Meeting & Press Conference 2 PM

Complete Economic Calendar can be found here.

EUR

The Euro is experiencing quiet times as all eyes are on the U.S. Fed decision. Regardless, it must be pointed out that a slew of data showed the continent’s situation is not as bad as thought. German Retail Sales surprised as they increased 3.5% instead of just the 0.5% estimated, French Consumer Price Index fell only slightly, and the Euro-bloc’s Gross Domestic Product yearly average jumped from 1.0% to 1.1%.

Although these are somewhat positive signs, the European Central Bank may feel it necessary to use whatever few tools they have left to try boosting economic activity and will be asking governments to foot the rest of the bill. After years of austerity and plenty of monetary intervention, government spending is sorely needed as those central bank measures have been exhausted. The ECB has 0.0% benchmark interest rate and a (-0.4%) Deposit rate.

GBP

The Pound remains down as newly seated Prime Minister Boris Johnson continues his tour around the United Kingdom, attempting to build a bigger coalition to be able to govern and set a plan for Brexit. In recent responses to the media, the British leader has taken back a step in guaranteeing a “no-deal” scenario by saying that he is focused on actually getting a new deal from the EU, or more like the one he had worked on as Foreign Secretary under Theresa May’s administration. The uncertainty will keep Sterling under serious pressure.

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