As anyone who was paying a modicum of attention could easily tell you, the Federal Reserve was never going to make any changes to monetary policy at today’s meeting. Instead, traders were tuning in to see any changes to the central bank’s statement and extrapolate what that may mean for interest rates moving forward.
The dollar’s choppiness has been a dominant theme for several weeks now, but as we come to the business end of this week, it could finally make a more decisive move in one or the other direction. The indecisiveness is a reflection of a tired bullish trend: market participants have been piling in on the greenback for several months amid an improving macro picture in the United States and speculation over further rate hikes from the Federal Reserve.
Despite keeping a more Neutralized Bullish Bias yesterday, we gave the spot to buy in both the ES (2803.25-2806) and NQ (7175-7200). To recap, the market incurred profit taking on Friday as there was little to no value at elevated levels ahead of the weekend and a pivotal week. That selling lasted through Monday.
It’s become gospel that technology is the most important sector of the U.S. stock market; after all, tech stocks have the largest weighting in the S&P 500 (~26%), and the sector outperformed all others over the last year (+26%).
Contradicting reports surrounding the state of the U.S.-China trade relations are likely to create a sense of confusion across all markets, while also possibly desensitizing investors towards global trade developments.
Crude oil prices are back under pressure as there are reports that the United States is looking to more than double tariffs on China, as well as a shockingly bearish weekly inventory report from the American Petroleum Institute (API). Out of nowhere, the API reported a 5.590 million barrel build, confounding experts and expectations as well as a big 2.890-million-barrel increase in distillate supply. Gasoline did fall by 791,00 barrels but with trade war fears keeping us on edge, today's Energy Information Administration (EIA) supply report will be more important than today's Fed announcement.
Dollar bulls were absent during Tuesday’s trading session as investors remained on the sidelines ahead of the Federal Reserve’s two-day monetary policy meeting. Markets could offer a muted response to the meeting, especially when considering how there will be no updated economic projections or post-announcement press conference by Federal Reserve Chairman Jerome Powell.
The euro was again the strongest currency among the majors this morning, rising most notably against the yen after the Bank of Japan delivered what turned out to be a rather dovish policy statement. The single currency has found support on the back of Eurozone data, which showed headline consumer price inflation rose in July at its fasted pace since 2012.