Sterling and Oil Drop as Canadian Dollar Gains

Today, everyone will focus on the Federal Open Market Committee (FOMC) meeting, and the rate-setting discussion and policy decisions for the US central bank. Since it is widely expected that the FOMC will hike rates, the big question is what comes next.

Investors will focus on any other hints about whether they will impose another hike this year, and if so, when; this is the market’s main concern at the minute. No matter what happens during the meeting, investors still believe that rates will have a more gradual raise than the Fed does and, therefore, this would probably be very supportive for the dollar.

The members of the committee have also started a discussion about when would be appropriate to start trimming their huge balance sheet- it is now almost 4 ½ times bigger than it was prior to the Global Financial Crisis.

Fundamental Analysis- Sterling and Oil Drop as Canadian Dollar Gains

In Europe, the UK unemployment rate will be announced today. Unemployment rates are predicted to stay at the moderately low levels of 4.6% and the average weekly earnings are expected to rise at the standard rate of 2.4% on an annual basis. These predictions should prove neutral for the pound. However, if unemployment falls to 4.5% this might have significant implications on the pound.

During US morning, US CPI and retail sales will be announced but since these will be ahead of the FOMC meeting, it is not expected to significantly affect the market. More specifically regarding retail sales, these are not expected to upset in any way the market ahead of the FOMC as they are all expected to be in line with their recent performance.

The dollar continued dropping for a third consecutive day with US Treasuries edging up ahead of the Federal Reserve’s policy decision and the European stock markets had a higher open after a mixed day in Asia.

The pound, which had some increase for the first time on Tuesday, continued climbing against USD, the same way that other G-10 currencies including the euro did. In addition, gold rose while oil continued declining and US stocks scaled to record highs on Tuesday as technology shares started rebounding, causing S&P 500 futures to lower.

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.

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