Markets turn to the next central bank meeting

August 1, 2019

The Fed Reserve set markets off earlier this morning, with both indices and currencies feeling the effects of the first interest rate cut in 10 years.

USD-paired currencies looked set for a solid session, until the Fed meeting saw a sharp strengthening in the dollar. The EURUSD began the day at $1.11531 and remained flat early, edging up to a high of $1.11619 mid-session. It stayed near those levels for a few hours before beginning its slide in the lead up to the meeting. The euro then plummeted to a low of $1.10591 after the meeting and is now trading at $1.10775. The GBPUSD was able to mask the losses it suffered because it made some decent gains in the lead up to the Fed meeting. The pair opened at $1.21503 and was steady early, before surging mid-session to a high of $1.22492. The Fed meeting put a stop to any further gains as the pound tumbled to lows of $1.21320. It has come off those lows and is currently trading at $1.21544.

The Dow was belted overnight, unimpressed by the latest central bank meeting. The index started the day at 27,250.34 and was flat in the lead up to the interest rate meeting, bumping up to a high of 27,300.06 mid-session. The interest rate meeting saw the Dow fall sharply to a low of 26,735.24 in what some saw as a surprising move for the index. It has come off those lows and is now trading at 26,848.86. The Dax toiled away for most of the session before being dragged down by the Dow. The German index opened the day at 12,169.21 and hummed along for most of the day, ticking up to a high of 12,221.77. The Dax then fell to lows of 12,038.98 before closing at 12,139.41.

The day ahead is packed with plenty of market data, where attention turns to the UK this time. The BoE will be holding their latest interest rate meeting later tonight, where interest rates are expected to remain on hold. This meeting is a significant one as it is the first meeting held since the change in Prime Ministers. The commentary surrounding Brexit will be crucial to listen to as it appears the new PM stokes the possibility of a no-deal Brexit.

Other data published today includes:

Canada – Manufacturing PMI

Australia – Import Prices, Commodity Prices

Europe – European, German and French Final Manufacturing PMIs, Italian & Spanish Manufacturing PMIs

UK – Official Bank Rate, Monetary Policy Summary, BoE Inflation Report, Asset Purchase Facility, Manufacturing PMI, BoE Governor Mark Carney speaks

US – Challenger Job Cuts, Unemployment Claims ISM Manufacturing PMI, Final Manufacturing PMI, Construction Spending, ISM Manufacturing Prices, Natural Gas Storage, Wards Total Vehicle Sales


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