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US Open Preview – Dollar spikes above 113 versus yen ahead of FOMC decision; kiwi awaits RBNZ rate announcement too
September 26, 2018 11:26 amVideo
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Here are the latest developments in global markets:
Day Ahead: All eyes on FOMC and RBNZ interest rate decisions
Traders are expected to have a relatively busy day at the office on Wednesday as central bank events will be in the spotlight, with the Federal Reserve and the Reserve Bank of New Zealand making announcements on interest rates and publishing their economic projections.
The two-day Fed policy meeting concludes today with investors projecting the central bank to raise rates by another quarter-percentage point. However, the focus would not be on the rate announcement which is fully priced in by the markets, but on the monetary policy statement following the rate decision at 1800 GMT as well as on Fed chair Jerome Powell press conference at 1830 GMT.
Investors will be paying close attention to the central bank’s latest economic projections and will be eager to hear any updates on the path of rate increases in the coming years and any comments around the global trade dispute and outlook for growth. If the Fed Chair Jerome Powell suggests that it is time to slow down, the greenback could drive quickly lower as it would cast doubt about future rate hikes. On the other hand, if he is unambiguously hawkish the dollar would soar against all major currencies.
Earlier in the day, new home sales for August will be released out of the US. Sales are forecasted to tick higher by 0.5% compared with -1.7% in the preceding month. In oil markets, the EIA weekly report due at 1430 GMT is expected to indicate a smaller decrease in US crude oil stocks for the week ending September 21 relative to the preceding week – the decrease is estimated at 1.279 million barrels versus the previous week’s decline of 2.057mn barrels.
Next in focus would be the Reserve of Bank of New Zealand (RBNZ) rate announcement at 2100 GMT. The central bank is predicted to hold rates unchanged at 1.75% and the meeting will be accompanied by a press conference by Governor Adrian Orr, and thus the focus will be on the statement for any updates. Last week’s GDP figures have helped to relieve concerns that the economy is heading into a slump. However, despite the pickup in growth, the RBNZ remains concerned about persistently weak business confidence.
As for public appearances, ECB chief Mario Draghi will be meeting German President Steinmeier at 1200 GMT at the ECB headquarters in Frankfurt where they are expected to make short statements. Also, US President Donald Trump will be chairing a UN Security Council meeting on Iran during the annual gathering of world leaders at the United Nations. Japanese Prime Minister Shinzo Abe and U.S. President Donald Trump will hold a summit meeting as well, with trade being high ranked in the agenda.
Brexit could make headlines as well as the British Prime Minister is scheduled to speak at the Bloomberg Global Business Forum in New York about her plans to build Britain’s business profile after the country’s exit from the EU.
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