In general, there is no surprise in the markets at the start of today’s session, with most assets in a lull, waiting for the Fed meeting and the decision on the base rate.
The rate cuts are more than certain at this stage, however, market participants will be keeping a close eye on the central bank’s comments and their views on the future path of monetary policy.
In such a situation, the major currencies are unchanged and are traded in a narrow range. It should be noted that again there is a large portion of leveraged options in the USD / JPY currency pair that will keep price action limited in current consolidation.
The Australian made a slight uptick against the dollar when it posted CPI in the third quarter, but then regained its old position.
Looking ahead, the lull period seems poised to extend deep into the US session, but we are still expecting a chop trade during the European morning. With that being said, I would not have made any long-term decisions before the Fed meeting at 8:00 PM.
I do not expect a spectacular reaction of the main stock indices, as everyone knows what will happen, the bank will reduce interest rates by 25 basis points to 1.75%, from 2.00% previous. However, what they will say is crucial. Will we see another drop in rates in December? When and how many times will interest rates be cut in 2020, or is the economy stable enough to afford to remain hawkish?
Whether SPX will record a new record high this evening depends directly on Jerome Powell’s comments. Whether the gold will benefit from the incoming cash flows or whether they will go to the indices – the answers tonight at 20:00.
Trader Aleksandar Kumanov