Financial Analyst/Content Writer, RADEX MARKETS
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
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The Fed decision weighed heavily on the Dollar yesterday, pushing the Euro and the Swiss Franc to multi-year highs against the greenback. The common currency rose 0.90% yesterday to close Tuesday’s session at $1.187, representing a four-year high against the Dollar. Buying pressure on the Swiss Franc meanwhile was even more aggressive, driving USDCHF below 0.79 for the first time since 2011. The drop in the Dollar came despite the publication of strong US economic data yesterday; retail sales were far better than expected in August and industrial production easily topped forecasts. Everything is secondary to the FOMC in the current climate. The wait is almost over.
Gold edged marginally higher on Tuesday, but less than would otherwise be expected given the weakness in the Dollar. The precious metal breached $3,700 per ounce for all of five minutes yesterday before settling at $3,689 for the day. Silver on the other hand came within a hair’s breadth of $43 before closing the day in the red. The white metal is experiencing some greedy profit-taking early this morning however, with prices falling back below $42 an ounce.
Markets are definitely more jittery ahead of this evening’s FOMC meeting, which is still widely expected to deliver a mere 25-bps rate cut. The real question is how many board members will vote in favour of a larger cut, in particular new board member Stephen Miran, who was confirmed by the US Senate only on Monday. Miran is viewed as a Trump loyalist and is expected to push for more aggressive rate cuts; it remains to be seen whether he will be alone in that regard. This evening’s meeting may also change the odds for future rate cuts before the end of the year.
A reminder to currency traders to watch out not only for the Federal Reserve later today, but also the Bank of Canada, which is expected to reduce rates on the Canadian Dollar this afternoon. The Bank of England and Bank of Japan are expected to hold rates steady tomorrow and Friday respectively, so any surprise change will have an immediate and unforeseen impact.
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