Daily Alert: Thursday 2nd November 2017

Mark Nugent Daily Alert, Nov 2017

Trading Analysis for Thursday 2nd November 2017

The big news yesterday was in the US with the Fed’s Open Market Committee (FOMC) rate decision. As outlined in ZeroHedge:

FOMC held rates between 1.00%-1.25%, as expected with the decision made by a unanimous vote.

FOMC stated that activity is rising at a “solid rate” despite hurricanes and near-term risks roughly balanced and noted it is watching inflation closely and repeated it sees inflation stabilising at 2% over the medium term.

Note: There were no major developments from the FOMC which was reflected in the muted reaction seen across asset classes, although its categorisation of the US economy was upgraded to expanding at a “solid rate” (versus the previous “rising moderately”), and absent any major shockers, analysts seem content to peddle the ‘December hike remains on track’ narrative – the implied probability nudged up slightly, with markets now pricing in a 98% chance the FFR target will be lifted by 25bps by the end of the year.

Elsewhere, the WSJ reported that the White House had informed status quo candidate Powell that President Trump intends to pick him as the next Fed Chair.

AUD Trade Balance was positive (1.75B vs 1.42B).

The USD was unperturbed by the Fed’s actions although it fell after the Powell news. US equities make intra-day highs but close down and gap down this morning. Elsewhere equities are up except the FTSE100 which falls for reasons unclear. The US 10 Year is slightly, slightly down. Gold is up and the JPY weakens. There is little movement in currencies although the GBP is maybe poised to break into new upside territory.

Risk sentiment is neutral, meaning we can trade with relatively moderate risk.

Later today, the major issue is BoE Super Thursday and an expected interest rate hike.

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