Forex news for North American trade on July 31, 2019:
- Federal Reserve lowers interest rates by 25 basis points, as expected
- Redline of the July 31 FOMC statement: What changed
- Full text of the July 31, 2019 FOMC statement
- Powell: I didn't say this was one-and-done
- Powell Q&A: Fed is adjusting towards a "somewhat more accommodative policy"
- Powell opening statement: Cut intended to 'insure' against downside risks
- US Q2 employment cost index +0.6% vs +0.7% expected
- Canada May GDP +0.2% vs +0.1% m/m expected
- US wage data and Canadian GDP coming up next
- US ADP July employment +156K vs +150K expected
- Leon Cooperman says Fed will be one-and-done
- Germany says it won't take part in Strait of Hormuz military initiative
- OPEC July survey shows lowest output since 2011
- US EIA weekly crude oil inventories -8496K vs -2750K expected
- White House says China talks were constructive, next round in Sept
Markets:
- Gold down $17 to $1413
- US 10-year yields down 4 bps to 2.01%
- S&P 500 down 33 points to 2980
- WTI crude down 4-cents to $58.01
- USD leads, EUR lags
Fed day finally came but the bar was too high for Powell to meet. The market had fully priced in a 25 bps cut with a 17% chance of 50 bps or a 76% chance that the cut comes in September. The statement was basically the same as the previous one while Powell didn't promise anything in the press conference.
The dollar soared as front-end yields rose. EUR/USD sank to 1.1070 -- a two year low -- from 1.1130. Cable had been in the midst of a solid bounce but it was wiped out in a fall to 1.2154, near the cycle low.
USD/JPY was pulled in two directions. The less-dovish outcome boosted it to 108.90 from 108.50 but the enthusiasm was tempered by risk aversion as US stocks fell by as much as 50 points.
Commodity currencies struggled with AUD/USD down to 0.6840 from 0.6885 while USD/CAD rose to 1.3193 after earlier sinking to 1.3106 on strong GDP and higher oil prices.
Gold was choppy through the Fed decision but eventually sank down to $1413 from a high of $1435. The market wants to see the start of an easing cycle and something to weaken the dollar, not a one-and-done.
