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Markets Divided Over Fed Rate Cut
17 septembre 2019 — 2 min read
The AUDUSD opens at 0.6865 (mid-rate) and the NZDUSD opens at 0.6355 (mid-rate) this morning.
Markets continue to consolidate ahead of tomorrow morning's Federal Reserve monetary policy statement with the CME Group's FedWatch Tool currently indicating the market is very much divided as to whether the Fed will remain on hold or cut rates by 25 basis points.
One week ago the FedWatch tool had the probability of a cut at 92.3% but this has been steadily falling and as of this morning now sits at 51.9%.
The shift in sentiment is largely due to better than expected economic data with this morning’s no exception.
According to the latest Fed report industrial production climbed by 0.6% in August after edging down by an upwardly revised 0.1% in July. The result was significantly better than forecast and more than reverses July’s previously reported 0.2% fall.
There was better news for the Euro overnight with Germany's economic sentiment improving strongly in September. According to the latest ZEW Indicator of Economic Sentiment for Germany sentiment climbed to -22.5 in September after plummeting to -44.1 in August. Economists had expected a -38 reading.
Markets are likely to remain subdued ahead of tomorrow morning's announcement with the tone of the accompanying statement to dictate direction after the Fed deliver a 25bps cut.
Global equity markets are mixed - Dow -0.08%, S&P 500 +0.02%, FTSE -0.01%, DAX -0.06%, CAC +0.24%, Nikkei +0.06%, Shanghai -1.74%.
Gold prices are little changed trading at $1,500 an ounce. WTI Crude Oil prices are down 6% from this time yesterday currently trading at $59.12 a barrel.
Upcoming Data Releases
NZ: Current Account - 10:45 NZST
AU: MI Leading Index m/m - 10:30 AEST
Mid-Market Rates
AUDUSD0.6865-0.1%NZDUSD0.63550.1%AUDEUR0.6201-0.6%NZDEUR0.5741-0.4%AUDGBP0.5493-0.6%NZDGBP0.5085-0.4%AUDJPY74.250.1%NZDJPY68.750.2%AUDNZD1.0802-0.2%NZDAUD0.92580.2%GBPAUD1.82050.6%NZDCAD0.8419-0.1% GBPNZD1.96660.4%
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