Market Roundup
- Wall St slumps as Fed fuels global growth concerns.
- Fed Funds futures price first U.S. rate hike in January 2016 (52% chance).
- Gold hits near 3-week high as Fed rate decision weighs on dollar.
- China’s Yuan not far from equilibrium (China IMF exec director).
- ECB’s Coeure: global growth prospects have darkened; have worsened markedly in EM economies.
- ECB’s Coeure: Monetary policy cannot restore growth in long term.
- BOE’s Haldane: If downside risks materialize BOE could need to loosen monetary policy.
- BOE’s Haldane: possible solutions to persistent lower rates include higher inflation targets, permanent QE.
- BRL hits 13-year low as Brazil crisis offsets Fed boost.
Looking Ahead – Economic Data (GMT)
- No Significant Data
Looking Ahead – Events, Other Releases (GMT)
- No Significant Events
Currency SummariesEUR/USD is likely to find support at 1.1268 and currently trading at 1.1297 levels. The pair has made session high at 1.1428and hit lows at 1.1270 levels. The dollar rebounded against euro from a three-week low on Friday, a day after the Federal Reserve kept U.S. interest rates on hold, in a late technical rally after a steep sell-off the previous session. The Fed decision largely disappointed investors who wanted to get the process of normalizing rates going even at a gradual pace. It was largely expected though. However, it was the Fed’s dovish message, specifically the uncertain global growth outlook that could weigh on the world’s largest economy, that took the market by surprise. Markets have reduced expectations for a rate increase this year, which could dim the short-term outlook for the dollar. Some analysts expect the dollar to bounce back in the near term as soon as it becomes clear that the Fed is ready to end its zero-rate policy. The euro was down 1.2 percent against the dollar at $1.1294 after hitting a three-week high of $1.1459. To the upside, immediate resistance can be seen at 1.1345. To the downside, immediate support level is located at 1.1266 levels.GBP/USD is supported in the range of 1.5480 levels and currently trading at 1.5523 levels. It reached session high at 1.5563 and dropped to session low at 1.5511 levels. Sterling erased gains against dollar on Friday as the U.S. Federal Reserve’s decision not to raise rates yet left traders on edge. The Fed kept rates at near zero in a bow to worries about the global economy, financial market volatility and sluggish inflation at home, but left open the possibility of a modest policy tightening later this year. British financial markets scaled back expectations for the Bank of England to tighten monetary policy on Friday after the U.S. Federal Reserve backed away from raising interest rates, pushing both bond prices higher. British government bonds initially chalked up their strongest one-day gains since early July, when Greece was scrambling for fresh aid from creditors, while markets pushed back bets on a BoE rate rise deep into the second half of 2016. Despite the more distant prospect of a BoE rate move, sterling eased from three-week high against the U.S. dollar, falling from $1.5650 tohit session low at 1.5507 in the late American hours. To the upside, immediate resistance can be seen at 1.5550. To the downside, immediate support level is located at 1.5500 levels.USD/JPY is supported around 119.62 levels and currently trading at 119.96 levels. It peaked to hit session high at 120.04 and made session lows at 119.03 levels. The dollar was flat against Japanese on Friday, a day after the Federal Reserve again kept interest rates on hold, as investors focused on the risks of the global slowdown to the U.S. economy. Rates futures placed an 11 percent chance on Friday that the Fed would raise rates in October, down from 41 percent early on Thursday, according to CME Group’s Fed Watch program. A December move by the Fed had a 42 percent chance, with traders putting a 52 percent probability for a rate increase at the Fed’s late-January meeting. In late trading, the dollar index was up 0.7 percent at 95.191, after dropping to a three-week low of 94.063. Against the yen, the dollar was flat at 119.96 yen. On the data front, the net worth of U.S. households rose in the second quarter due to an increase in the value of homes and investments, a positive sign for future consumer spending. The increase added $700 billion to the total wealth of American families, putting it at a record high of $85.7 trillion, a report by the Federal Reserve showed on Friday. To the upside, immediate resistance can be seen at 120.28. To the downside, immediate support level is located at 119.62 levels.USD/CAD is supported at 1.3150 levels and is trading at 1.3210 levels. It has made session high at 1.3220 and lows at 1.3014 levels. The Canadian dollar weakened versus the U.S. dollar on Friday, with the commodity currency hurt by a sharp drop in the price of crude oil a day after the U.S. Federal Reserve decided to hold interest rates at near zero amid global uncertainty. The Canadian currency ended the North American session changing hands at C$1.3217 to the greenback. It had been as strong as C$1.3013 at one point, but gave up gains steadily throughout the session as oil fell. It gained 0.3 percent on the week. Canada’s annual inflation rate held steady in August as lower gasoline prices moderated the higher cost of food, data showed on Friday, suggesting the Bank of Canada has room to keep interest rates low. Annual inflation was 1.3 percent last month, according to Statistics Canada, the same as in July and matching economists’ forecasts. To the upside, immediate resistance can be seen at 1.3250. To the downside, immediate support level is located at 1.3160 levels.Equities RecapEuropean shares fell sharply on Friday after the U.S. Federal Reserve kept interest rates unchanged, fuelling concerns over the global economy and leaving investors guessing about when policy tightening will start.UK’s benchmark FTSE 100 closed down by 1.46 percent, the pan-European FTSEurofirst 300 ended the day down by 1.92 percent, Germany’s Dax ended down by 3.17 percent, France’s CAC finished the day down by 2.81 percent.Wall Street stocks closed lower on Friday in heavy trading as the Federal Reserve’s decision to keep interest rates near zero fueled concerns about the potential impact of continuing weak global growth on U.S. corporate earnings.Dow Jones closed down by 1.74 percent, S&P 500 ended down by 1.59 percent Nasdaq finished the day down 1.35 percent.Treasuries Recap U.S. Treasury yields fell on Friday, extending the previous day’s declines after the Federal Reserve kept interest rates unchanged Thursday and doubts grew as to whether it would tighten policy at all this year.U.S. 30-year Treasury bonds were last up 2-3/32 in price to yield 2.93 percent, from a yield of 3.04 percent late Thursday. Benchmark 10-year notes were last up 25/32 in price to yield 2.13 percent, from a yield of 2.22 percent late Thursday.Two-year notes were last up 1/32 in price to yield 0.68 percent, from a yield of 0.70 percent late Thursday.
Commodities RecapGold rose to a near three-week high on Friday as the Federal Reserve’s decision to leave U.S. interest rates unchanged rattled investors’ outlook on the global economy and weighed on equity markets in developed economies.Spot gold was up 0.5 percent at $1,137.34 an ounce at 2:49 p.m. (1849 GMT), after earlier touching its highest level since Sept. 2, at $1,141.50. Gold was on track to finish the week up around 2.7 percent, snapping a three-week losing streak.Oil prices tumbled on Friday, with U.S. crude falling 5 percent, after a selloff in Wall Street equities offset positive impact to crude from a third weekly decline in the U.S. oil rig count.U.S. crude futures front-month settled down $2.22, or 4.8 percent, at $44.68 a barrel. The front-month in Brent, the global oil benchmark, settled down $1.61, or 3.3 percent, at $47.47.
The material has been provided by InstaForex Company – www.instaforex.com