US and China talks end abruptly
US Chicago PMI plunges sub-50
EIA Inventories confirm draw-downs form last night
The time has come and all eyes are on Jerome Powel at 7 pm (BST). Traders will be expecting the FOMC to cut interest rate for the first time in a decade after the 2008 financial crisis. Traders expectation point out to a 75% odds of a 25 bbp cut, making it the base case expectation for tonight. The focus will shift on the FED forward guidance signalling its intent to continue easing and for how long. Further detailed will be also awaited on the Balance sheet size, with analysts now favouring an higher chance of ending the balance sheet normalisation earlier than September (as from previous meeting). Will be also interesting to monitor Powell attitude during the Press Conference given the increasing number of Dissident, with Bullard (Dove) in favour of cuts earlier than today and George and Rosengreen (Hawks) saying that "Threshold for Monetary easing has not been met yet." In light of recent data, I would argue that Powell will have to provide convincing reasons to justify the FOMC decision, with the market in need to find reasons away from caving into Trump' persistent request to aggressive monetary easing.
US Equities traded flat ahead of the FED. FTSE100 is the biggest under-performer as GBP pairs back some of its losses.
The FX space traded mixed ahead of tonight key meeting for the faith of the US Dollar. GBP pairs back some of it recent losses. All the rest of G10 FX pairs traded mixed in light of profit taking activity pre-Fed. Crude Oil traded remained elevated as DOE confirm recent trend in decreasing stockpiles. Notable the rebound to 12.2 mln bpd in US weekly production after the big drop that we had last week. Gold traded choppy amid a lacklustre session.
If you missed the morning briefing from the desk click HERE