Forex news for Americas trading on September 18, 2019:
Fed news:
- Fed lowers interest rates by 25 basis points, as expected
- Redline of the changes in the FOMC statement shows little difference
- FOMC central tendencies for GDP, employment, inflation from September 2019 meeting
- The FOMC dot plot from the September 2019 meeting
- The FOMC September 2019 full statement
- Powell Q&A: Asked about 'mid-cycle adjustment' says they see a favorable economic outlook
- Fed's Powell: Rate cut was due to developments and insurance against risks
- Trump says Powell has no guts, no sense, no vision
Other news:
- Canada August CPI +1.9% y/y vs +1.9% expected
- US building permits for August 1419 K vs 1300K estimate
- DUP's Foster believes border solution can be found with flexibility on all sides
- Pompeo: Saudi attack didn't come from Houthis, it came from Iran
- Saudi defense ministry: Attack was unquestionably sponsored by Iran
- US weekly EIA crude oil inventories +1058K vs -2250K expected
- Trump picks Robert O'Brien as new national security advisor
- Trump: I have instructed Treasury to substantially increase Iran sanctions
Markets:
- Gold down $6 to $1495
- WTI crude oil down $1.19 to $58.15
- US 10-year yields down 1.4 bps to 1.79%
- S&P 500 flat at 3005, recovering 26 point loss
- GBP leads, NZD lags
The Fed was the focus on the day and they delivered the 25 bps cut that was expected but the commitment to more cuts was limited, particularly with the dot plot. The response was a stronger dollar with USD/JPY rising to 108.45 from 108.15, that's the highest since July 31.
Similar 30 pip moves came elsewhere and the move was relatively stable, unlike in stock markets where the dip was bought. The Treasury market reaction was to push the front end back to where it was on Friday.
Late in the day some upbeat comments from the DUP on border issues helped to lift the pound to 1.2500 but it was given back later to finish at 1.2470.
USD/CAD rose a half-cent on the day as oil gave back another 2% of Monday's gain. Hedgers are selling but there is also a sense that US strikes aren't coming. Trump said 'we'll see' but he hinted that war was a last resort and that a diplomatic response is coming.
