News & Analysis

Overnight on Wall Street: Wednesday 18/09/19

September 18, 2019

By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

Investors’ attention switch from the weekend attacks to the upcoming Fed’s interest rate decision. After a relatively mixed US session, major US equity indices rose higher towards the end of the trading day. Wall Street ended in positive territory with gains between 0.1 to 0.4%.

After the spike of a key lending rate, the Fed had injected billions of dollars in the financial system on Tuesday to calm money markets. At one point, the overnight borrowing costs rose as high as 10% forcing the Fed to intervene in the repo market with a move it has not used in more than a decade.

The Fed also stated that it is willing to spend another $75 billion on Wednesday. The focus is now on the Fed’s interest rate decision and the path of the Fed Funds rate.

Currency Markets

In the FX market, major currencies were stronger against the US dollar ahead of the Fed’s announcement despite upbeat Industrial Production and Capacity Utilisation data. The central bank is expected to cut interest rate by 25 basis points this Wednesday.


Source: Bloomberg Terminal

The Euro emerged as the best performing currency mostly on the back of the selling bias in the greenback. The pair also find some support from better-than-expected ZEW surveys on the economic sentiment across Germany and the eurozone area.

The EURUSD pair jumped from the 1.09 level to trade above the 1.10 level.

EURUSD (Hourly Chart)


Source: GO MT4

The Aussie dollar was relatively flat at 68.60 US cents. The dovish RBA minutes prevented the local currency to benefit from the weakness in the US dollar as markets participants are now pricing in another rate cut before 2019.

Commodities

The rally in oil prices has tamed down as it is reported that Saudi Arabia will soon restore most of its oil output and return to normal production levels in weeks. There were a few conflicting reports since Monday on the time it will take to cover the losses occurred during the attacks.

WTI and Brent Crude fell from recent highs and are currently trading in the vicinity of $58 and $63.

UKOUSD and USOUSD (Hourly Chart)


Source: GO MT4

Gold is trading in a tight range since Monday. The risk-off sentiment revived the demand for the yellow metal. However, we saw the XAUUSD pair dropped below the $1,500 level as risk sentiment slowly improves.

The US dollar weakness helped the precious metal to rise above the key psychological level above $1,500 again.

XAUUSD (3-Day Chart)

Source: Bloomberg Terminal

Key upcoming events

Imports, Exports and Trade balance (Japan)
Westpac Lending Index (Australia)
Retail Price Index, and Producer & Consumer Price Index (UK)
Consumer Price Index (Eurozone)
Consumer Price Index (Canada)
Housing Starts, Building Permits, FOMC Economic Projections & Press Conference, Fed’s Monetary Policy Statement & Interest Rate Decision (US)

Thursday, 19 September 2019
Indicative Index Dividends
Dividends are in Points
ASX200WS30US500US2000NDX100CAC40STOXX50
0.9500.1780.112000
ESP35ITA40FTSE100DAX30HK50JP225INDIA50
0000000

Disclaimer: Articles and videos from GO Markets analysts are based on their independent analysis. Views expressed are of their own and of a ‘general’ nature. Advice (if any) are not based on the reader’s personal objectives, financial situation or needs.  Readers should, therefore, consider how appropriate the advice (if any) is to their objectives, financial situation and needs, before acting on the advice.

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