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Federal Reserve Chairman Jerome Powell delivered the razzle dazzle on Wednesday with a 50 basis point cut to start the rate-lowering cycle. Economists didn’t expect the move but markets had sniffed it out with Fed funds futures pricing in a 55% chance of a larger cut.

The immediate reaction was a ‘risk on’ one that include broader US dollar selling, bond buying at the front end, a jump in gold prices and higher stocks.

Equity markets are now up eight days in a row as they sensed that Powell could cut by a larger margin. In the aftermath of the cut, the Russell 2000 is particularly strong, up 1.2%.

In FX, the pound was a winner as it rose to the best levels since 2022.

More broadly, the US dollar index fell to a 14-month low, in part due to the euro climbing to 1.1177 at the high.

This article was written by Adam Button at www.forexlive.com.

The major US stock indices are trading within 0.03% of unchanged as the market calmly wait for the FOMC rate decision at 2 PM ET.

The S&P index reached a high price today of 5642.84. Yesterday, a new all-time high price was reached intraday at 5670.82. The high closing level is up 5669.67.

The Dow 30 stock in the same reached a new all-time high at 41835.27 yesterday. It is currently trading at 41593 with a high price of 41636.54 today.

The NASDAQ index is trading down -6.35 points at 17621.78. It’s high price this week reached 17781.74 which was near high prices from August 27 and August 29. Getting above that level would be needed to increase the bullish bias. On the downside the 200 hour moving average comes in at 17381.40. The 100 hour moving average comes in at 17323.49.

This article was written by Greg Michalowski at www.forexlive.com.

On the day:

• Stoxx 600 -0.5%
• German DAX flat
• Francis CAC -0.5%
• UK’s FTSE 100 -0.7%
• Spain’s Ibex -0.1%
• Italy’s FTSE MIB -0.4%

There was a nice run-up into the Fed decision but there is some angst ahead of today’s announcement in many markets. That’s usually a good thing as the Fed often delivers dovish surprises (though the bar for that is certainly high today).

This article was written by Adam Button at www.forexlive.com.

• Crude oil inventories -1630M vs -0.500M est
• Gasoline inventories +0.069M vs +0.240M estimate
• Distillates inventories +0.125M vs +0.551M estimate
• Cushing -1.979M vs -1.704M last week
• refining utilization -0.7% versus expectations of -1.0%. Previously -0.5%

This article was written by Greg Michalowski at www.forexlive.com.

The major indices are little changed to start the trading day. Of course, the FOMC rate decision will be key at 2 PM ET where the Fed is expected to cut by 50 basis points but the decision can go either way. What the Fed chair says, what the Dot plot and the projections for GDP, unemployment, PCE inflation and the price action (see Adam’s preview and my technical preview for the 3 major currency pairs).

A snapshot of the market 15 minutes into the open is showing:

• Dow industrial average -30.73 points or 0.07% at 41575
• S&P index up 2.61 points or 0.05% at 5637.19.
• NASDAQ index up 16.28 points or 0.09% at 17644.34

The small Russell 2000 is up 4.31 points or 0.20% at 2209.78

The S&P index is on a seven-day win streak. The Nasdaq had been up 6 of 7 trading days. The S&P reached a new all-time intraday record level at 5670.81. The Dow also reached a new record this week at 41835.28.

This article was written by Greg Michalowski at www.forexlive.com.

Repositioning looks to be the theme in global markets today.

Treasury yields are rising, which indicates worry about the Fed cutting 25 bps instead of 50 bps. However the US dollar is weakening, which indicates the opposite.

It all points to more of a position squaring trade. On top of that, today’s UK core CPI data ran at 3.6% compared to 3.5% expected. That has the market thinking the BOE will leave rates unchanged tomorrow and spark some divergence with the Fed. Pricing currently sits at 73% for now change, up from 63% before the data.

Technically, the August high of 1.3266 is now within striking distance and I’m certain it will break if the Fed delivers a dovish 50 bps cut.

This article was written by Adam Button at www.forexlive.com.

Treasury yields are up 4 basis points across the curve in a sign of either:

1. The market over-pricing a dovish Fed
2. Angst ahead of the Fed decision

I tend to think it’s the latter as bond buyers have flooded in over the past two months. US 10s highlight just how far the move has come and how small the bounce in the past two days has been.

Looking to beyond the Fed decision, there is an interesting debate about the long end. By cutting rates deeper now, does it mean that the Fed’s terminal rate will be higher? Said differently, by front-loading cuts does it mean that they ultimately cut less?

I think that’s a compelling argument but I don’t think it’s the one the market is making today as the selling is even across the curve. If the market does come to that conclusion, it will be more of a bull steepener.

This article was written by Adam Button at www.forexlive.com.

The post Ex Dividend 19/09/2024 first appeared on IC Markets | Official Blog.

• Prior was 1.238m (revised to 1.237m)
• Starts +9.6% vs -6.8% prior
• Building permits 1.475mM vs 1.396M expected
• Permits +4.9% vs -4.0% prior

Starts hit a post-pandemic low last month but rebounded nicely here. They’re still far too low for population growth but rate

This article was written by Adam Button at www.forexlive.com.

US housing starts are due at the bottom of the hour and forecast to rebound to 1.310m after falling to a post-pandemic low last month.

The long-term chart highlights the problem: US housing starts are significantly lower than they were in 1980 despite a 47% increase in US population.

The housing crash led to a bust in home building that was just turning around when the pandemic dawned. Low interest rates briefly spurred more building but that was quickly undone by high rates.

A healthy rate for US home construction is upwards of 1.6m units and I could argue it’s significantly higher than that. Fortunately, as rates begin turning, it should tick towards that.

This article was written by Adam Button at www.forexlive.com.

Headlines:

• Cable nudges up to 1.3200 after sticky UK inflation data
• UK inflation data bolsters odds of BOE keeping bank rate unchanged tomorrow
• What are the main events for today?
• There will be disappointment one way or another come the end of today
• ECB’s Villeroy says likely to continue with rate cuts
• UK August CPI +2.2% vs +2.2% y/y expected
• Eurozone August final CPI +2.2% vs +2.2% y/y prelim
• US MBA mortgage applications w.e. 13 September +14.2% vs +1.4% prior
• Japan maintains economic assessment in latest monthly report

Markets:

• NZD leads, USD lags on the day
• European equities lower; S&P 500 futures up 0.1%
• US 10-year yields up 2.8 bps to 3.677%
• Gold up 0.4% to $2,578.75
• WTI crude down 0.9% to $69.22
• Bitcoin down 0.7% to $59,913

It’s all about the countdown to the Fed and we’re seeing some mixed moves in markets ahead of the main event later.

The dollar is weaker across the board and that despite Treasury yields holding up on the session. USD/JPY remains pinned down since Asia trading, keeping around 141.60-80 levels mostly during the session.

UK inflation data was the main highlight and that helped to prop up sterling a little bit. Services inflation remains a problem for the BOE and that increased odds of the central bank standing pat tomorrow. GBP/USD moved up from 1.3160 to just above 1.3200 currently.

Besides that, the greenback held slightly softer across the board with the antipodeans gaining some modest traction. AUD/USD is up 0.5% to 0.6785 while NZD/USD is up 0.7% to 0.6225 on the day.

That comes even as US futures are keeping more pensive, while European indices are looking rather sluggish. On the latter, perhaps investors are taking on a more cautious approach as the Fed decision will come after the European close.

Tick tock, tick tock. The end of the FOMC meeting can’t come soon enough.

This article was written by Justin Low at www.forexlive.com.