Forex news for North American trade on September 26, 2018:
- Federal Reserve hikes rates to 2.00-2.25%, as expected
- FOMC full statement from the September 2018 meeting
- Powell Q&A: We're able to raise rates then wait-and-see how economy reacts
- Powell opening statement: Our economy is strong, inflation is low and stable
- Here are the new Federal Reserve economic forecasts
- What changed: Here's the old dot plot and the new dot plot
- Italy ruling parties want deficit target at 2.4%
- Canada may finally get into the LNG game with a $31 billion investment
- Trudeau: Trump told me there will be no need to worry about tariffs after new NAFTA deal
- Weekly US EIA oil inventories +1852K vs -1500K expected
- US August new home sales 629K vs 630K expected
Markets:
- Gold down $6 to $1195
- WTI crude down 29-cents to $71.99
- US 10-year yields down 5 bps to 3.05%
- S&P 500 down 10 points to 2905
- JPY leads, CAD lags
The Fed kept things in check for most of the leadup to the decision. There were two notable non-Fed moves.
The first was a jump in GBP into the London fix. Cable quickly climbed to 1.3198 from 1.3169 then fell back just as fast. That was all about flows with no Brexit headlines out at the time. It's a reminder that quarter-end is a few days away.
The other move was CAD selling on reports that the White House will publish the text of a US-Mexico trade agreement Friday. That raises the probability that they will actually follow through with a threat to cut Canada out. That's still a low probability but it's higher than it was yesterday. USD/CAD ran above 1.3000 on the story but it got murky from there as Fed headlines hit shortly afterwards.
As for the Fed, the first move in the dollar was lower on the seemingly-dovish decision to remove the reference to being accommodative. That sent just about everything to the best levels of the day against the dollar. In the press conference he clarified that the move on accommodation didn't mean anything and that the plan remains to continue to hike until they have a reason not to. Afterwards, the dollar rebounded and recouped all its losses.
At the same time, the stock market didn't like the more-hawkish turn and that turned a 10 point S&P 500 gain into a 10 point loss. That change and a dip in yields pulled USD/JPY down to 112.75 from a high of 113.14.
