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US Open Preview – Dollar treads water ahead of FOMC rate decision; European stocks up
May 2, 2018 11:26 amVideo
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Here are the latest developments in global markets:
Day ahead: Eyes on FOMC rate decision; ADP employment report in focus
The FOMC rate decision will be the highlight event later in the day. Analysts are currently fully pricing in two more rate hikes this year and have started to bet on a third one, but this time they are widely expecting rates to remain unchanged at 1.75% as no press conference is scheduled to follow the rate announcement. However, analysts will be focused to identify any hawkish tweaks to the language expressed in the FOMC monetary statement as a series of data published recently proved that the US economy is gaining momentum. Should policymakers acknowledge encouraging economic trends, the dollar could stretch higher. Still, comments underlying the uncertainties in the trade front could limit greenback’s gains. Yet, Trump’s decision to extend negotiations on steel and aluminum import tariffs on Tuesday after temporary exceptions expired on May 1 showed that the US President is not currently in the mood to start a global trade war. The rate announcement and the FOMC rate statement are due at 1800 GMT.
Before the FOMC reveals its decision, investors will take a close eye on the ADP nonfarm employment report (1215 GMT) to finalize their projections for the more comprehensive nonfarm payrolls report delivered by the government on Friday. According to forecasts, the ADP numbers which track employment changes in the private sector are anticipated to show that job positions increased by 200,000 in April compared to a rise of 241,000 in the preceding month. An upward surprise in the data could hint that Friday’s NFP job numbers could also beat analyst forecasts.
Meanwhile, in oil markets, investors will be waiting for the EIA weekly update on US crude oil stocks to come into view at 1430 GMT.
In equities, Tesla is among companies releasing quarterly results on Wednesday; the carmaker will be reporting after the US market close.
Any headlines on the Brexit front are likely to attract attention as well, as the Cabinet Brexit sub-committee of senior ministers is gathering today to discuss the UK’s future customs partnership with the EU.
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