It’s been a quiet overnight session for most major currencies as market participants refrained from placing large trades ahead of today’s FOMC meeting. As we noted yesterday, the central bank is unlikely to make any outright changes to monetary policy, but the wording of the accompanying statement could tilt the scales in the hotly-contested “September vs. December” (for the first rate hike) debate.
Crude prices are drifting lower ahead of this morning’s Energy Information Administration (EIA) oil inventory report after the API reported a modest draw in crude, but a significant build in distillate fuel.
In the United States, investors are probably waiting to see the results of some company earnings before deciding on what to do with their long equity holdings. The second quarter reporting season has already started and will kick into a higher gear next week.
Most officials want to start normalizing interest rates, but they are wary of the risk of raising interest rates too quickly and would prefer to see more convincing evidence that the economic recovery is accelerating.
Traders are understandably focused on digesting yesterday’s less-hawkish-than-expected FOMC meeting as well as today’s Eurogroup meeting, which has been billed as the “drop dead” date in Greece’s debt negotiations, but we’ve also seen a major shift from Norway’s Norges Bank in today’s European session.