- Equity markets in the red on the day of the start of the FOMC meeting.
- An announcement of a 75 basis point hike is expected on Wednesday.
- The dollar rises modestly, while treasury bond yields continue to climb.
Stock markets are falling in Europe and Wall Street futures point to a negative open with declines of less than 0.50%. The dollar rises modestly in a market that is entering a waiting mode with the focus on the Federal Reserve meeting.
General red, not very intense
In Europe, the FTSE 100 fell 0.09%, the DAX lost 0.63% and the CAC 40 fell 0.73%. The S&P closed Monday up 0.69% and in Tuesday’s preview it is down 0.38%. Nasdaq futures fell 0.44% and Dow Jones futures 0.31%.
The operators are waiting for the decision of the Federal Reserve which will be revealed on Wednesday. A rise of 75 basis points is expected. What the central bank says will be key for stocks, bonds and the dollar. Financial asset prices could continue to move sideways and erratically until Jerome Powell’s press conference.
The treasury bond yields are at multi-year highs. The 10-year tranche yields more than 3.50% while the 2-year tranche is close to 4%. In Europe, the 10-year German bond exceeded 1.90%, remaining one step away from the highest since 2014.
On Tuesday in the US, housing starts and building permits for August and in Canada August inflation data. USD/CAD is just shy of 1.3300.
A strong rise in the producer price index was known in August in Germany at a record rate of 45.8% per year, in the face of soaring energy prices. The euro was not affected. EUR/USD was unable to break above 1.0050 and began to pull back towards the parity level.
After the funeral for the death of the queen, in the United Kingdom activity returns to normal. Prime Minister Liz Truss said a free trade deal with the US was unlikely for now. GBP/USD remains near the lows since 1985, although it was able to return above 1.1400. On Thursday the decision of the Bank of England is known.
Inflation in Japan was above expectations, reaching 3% per year, but this is not expected to change the expansive bias of the monetary policy of the Bank of Japan (He will announce his next decision on Thursday.) The yen shows weakness in the market and the USD/JPY rises trading around 143.70.
Among the worst performing currencies is the Kiwi, with NZD/USD testing 0.5900, at 2020 lows. AUD/USD stable near 0.6700. The Reserve Bank of Australia published the minutes that showed discussions to raise by 25 or 50 basic points in September and ratified that they will continue to rise although without a predetermined trajectory.
The central bank of sweden raised the interest rate by 100 basis points, which was a surprise. Despite that, the Swedish krona is falling, with EUR/SEK hitting a multi-month high above 10,830.
Oil prices are calm, virtually unchanged from Monday’s close. The barrel of WTI is around $85.80. Metals follow the dollar inversely for these hours. The Prayed and the silver after peaking in the Asian session, they fell into negative territory. XAUUSD failed to break $1680 and is at $1668, while XAGUSD stopped at $19.55 and is below $19.30.
The cryptocurrencies they are slipping modestly after Monday’s second-half rebound faded. The Bitcoin falls 1.50% and is approaching $19,000 from above while ethereum It is around $1,350.
Previously, the actions of Ford they fall more than 4% before a warning from the company for quarterly results affected by rises in costs and missing parts. Among the companies reporting results Tuesday are Apogee, Kingfisher, AAR Corp, Good Energy Group and Stitch Fix.
Technical levels
Source: Fx Street
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