Market Report 22.09: The Big combination of central banks decisions.
Good Morning traders,
Finally the most important day arrive and we already know the decision: the U.S. Federal Reserve left interest rates unchanged. The decision was more divided than Fed Chair Janet Yellen would have liked, with three dissenters – Cleveland’s Loretta Mester, Kansas City’s Esther George and Boston’s Eric Rosengren – preferring a hike.
Stocks rally in relief, with the gains stateside taking the Nasdaq to a new all-time high. This is how the biggest equity indices in the United States closed after the Fed’s decision:
DOW JONES + 0.9%
NASDAQ + 1,03%
S&P 500 + 1,09%
The Federal Open Market Committee expressed confidence in economic growth, but not enough to make a move this month. They also lowered their expectations for rate hikes in the years ahead, suggesting two hikes in 2017 and three each in 2018 and 2019.
Also the Asian markets climbed across the board on Thursday, as uncertainties surrounding key monetary policy decisions came to a close, following Wednesday’s announcements from the U.S. Federal Reserve and the Bank of Japan (BOJ).
The Japanese market, which climbed nearly 2 percent on Wednesday following the Bank of Japan’s (BOJ) decision to overhaul its monetary policy framework, was closed Thursday for a public holiday. The combination of these central bank decisions [from the BOJ and the Fed] is likely to see equity markets remove some risk premium over coming days, and the positive trend still on, in all the assets around the world. We can see how Europe is trading up with the DAX +1,10%.
In commodities the Gold is trading slightly lower, but stays close a three week high after jumping on the Fed decision to hold rates steady. And the oil is still up after the inventories that we knew yesterday and the dollar’s weakness.
In the economic calendar of Thursday we only have the ECB’s economic bulletin plus Eurozone consumer confidence scheduled for release. From the U.K. we had better-than-expected data with Public Sector Net Borrowing reporting a deficit of 10.1b vs. 10.5b expected.
Trading is up because of the global trend and the announcements of the Centrals Banks from yesterday. The next point of resistance can be at the level of 6.900, if that level is broke the FTSE 100 could reach the high time level again.
Graphics by: www.etoro.com
Having failed at 102.50 yesterday the US dollar has continued to slide lower and looks set for a move towards the recent lows around the 99.50 area. The pair is trading primarily on technical considerations as shorts want to run the stops at the psychologically important 100.00 level. But once done, the pair will rebound quickly as fundamentals take hold of the market. If USD/JPY falls to 100, it becomes an extremely attractive buying opportunity.
Graphics by: www.etoro.com
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