Morning market report

The markets opened up roughly 25 points this morning as investors remain tentative about the Federal Reserve’s two-day meeting on monetary policy that kicks off today. Following the conclusion of the meeting, the Fed will announce in a statement whether it plans to raise interest rates for the first time since 2006.

Asian shares ticked higher this morning on lighter volumes than usual. Meanwhile, short-term U.S. bond yields were floating near 4-1/2-year highs, while the dollar slid on falling U.S. inflation levels. Meanwhile, news of China’s financial outflows raised eyebrows this morning. According to reports, China's non-financial outbound direct investment surged roughly 18.2% (year-over-year) for the first eight months of 2015. These outflows were up 7% for the month of August (year-over-year).

USD/JPY: The dollar pulled back from daily highs this morning as news of a decline of U.S. consumer prices weighed down the currency. The Bank of Japan issues its monthly report on monetary policy. This morning, the Bank of Japan announced plans to sustain its quantitative easing program of buying 80 trillion yen assets annually. Data suggests that the domestic economy is improving, but concerns in emerging markets are affecting Japanese exports.

EUR/USD: The euro pared early losses this morning after soft Eurozone inflation levels weighed down trader sentiment. Today’s weak inflation figures have many expecting that the European Central Bank may continue its quantitative easing efforts in the coming months. An hour into the U.S. trading session, the Euro was up 0.26% against the dollar.

USD/CAD: The dollar was sliding against the loonie this morning by 0.32% ahead of the FOMC meeting and on news of rising oil prices. Oil prices showed strong gains this morning on news that domestic inventory levels decline. The Energy Information Administration reported this morning that crude stocks declined by 2.1 million barrels last week. WTI October prices added 2.83% this morning, while Brent crude futures gained 2.95%.

GBP/USD: The British pound gained more than 1% this morning against the dollar on news that the U.K.’s wage growth hit a six-year high, while the unemployment rate slipped to 5.5%. The news has hiked expectations that the Bank of England will raise interest rates in the coming weeks. Members of the Bank of England, including Governor Mark Carney, are expected to testify before the nation’s lawmakers, and a candid conversation about interest rates will be expected. The Bank of England has maintained record-low borrowing costs over the last six years, but falling energy prices have affected inflation levels.

Metals in Focus: Gold prices were up more than 1.25% this morning ahead of the Fed’s rate decision. Meanwhile silver added more than 3%. Silver prices remain off more than 20% from their 52-week highs.

Editor’s Note: Check back on Thursday at for more insight on whether the Federal Reserve could raise interest rates during its FOMC meeting that concludes tomorrow afternoon. A consensus anticipates that the central bank will hold off on raising interest rates as low levels of inflation offset confidence in the job market, where the “official” unemployment rate currently sits at 5.1%.

In addition, the Swiss National Bank will issue its report on interest rates, the European Central Bank (ECB) will release its Economic Bulletin, and U.S. economic data will include weekly jobless claims, housing starts, and building permits.


About the Author