Forex news for New York trading on September 16, 2020:
- FOMC statement says it would be prepared to adjust if risks emerge that would impede goals
- The FOMC statement full text
- The central tendencies forecasts for unemployment, inflation and GDP from the September 2020 FOMC meeting
- 2023 Fed fund dot plot shows four dots above zero, median unchanged
- Powell opening statement: Household spending has recovered 75% of decline
- Powell Q&A: We think the 'very powerful forward guidance we've announced today' will provide strong support
- US retail sales for August 0.6% vs. 1.0% estimate
- All Americans could get COVID vaccine by April, HHS official says
- US September NAHB housing market index 83 vs 78 expected
- Canada August CPI +0.1% vs +0.4% y/y expected
- Oracle's TikTok bid leaves US security concerns unaddressed - reportUK Conservative rebels reach deal over internal market bill
- ECB's Holzmann: Negative rates are harmful in the medium-to-long term
- EIA weekly US oil inventories -4389K vs +2074K expected
- US business inventories for July 0.1%vs. 0.1% estimate
Markets:
- Gold up $4 to $1958
- US 10-year yields up 1 bps to 0.687%
- S&P 500 down 16 points to 3385
- WTI crude oil up $1.92 to $40.20
- GBP leads, EUR lags
The retail sales report today was a bigger surprise than the Fed and I get the sense that some of the equity selling was more of a delayed reaction to that soft number rather than anything Powell said. Granted, the selling picked up when he indicated that there was no plan to buy more bonds (though it remains in the toolkit). That's not a surprise but it was somewhat of a trigger.
The dollar grabbed a solid bid ahead of the FOMC. I think that was position squaring but it ended up being the right move, at least after a few twists and turns. Markets hit the highs and lows of the day during Powell in equities but aside from USD/CAD the swings were small in FX.
EUR/USD was particularly soft today as it fell to 1.1800. Some of that was on EUR/GBP and EUR/CHF selling.
Under the radar was the 5% rally in oil even with all kinds of talk about soft demand. The headlines about an April vaccine certainty helped the mood when they hit but the weekly oil inventory data wasn't as bullish as the API report yesterday.
Gold tried a few times to get above $1970 but couldn't hold the line and slid backwards. I'll be watching it closely tomorrow because the Fed didn't offer anything for the gold bulls.
