On Wednesday, it appeared that markets were getting set to sit and wait for the next announcement from the FOMC.
As it happens, there was a bit of a surprise report suggesting the Trump Administration is planning on hiking tariffs on $200 Billion worth of Chinese imports from 10% to 25%. There has also been the suggestion that we could see this higher rate roll out as soon as Wednesday.
The news is bound to overshadow what would normally be a day that is heavily focused on the FOMC.
While the attention will still be on Jerome Powell and the FOMC as they conclude their two-day policy meeting. No one is actually predicting that we’ll see a rate hike this month. Markets are still pricing two more rate increases this year, which is likely going to be in September and December. The main takeaway from the meeting will likely be around further clarity on the timing of rate hikes.
Aside from the headline events, Wednesday will also bring about a slew of manufacturing data from across both the UK and Europe. While in the US session we get a preview of what might be in store on Friday, by way of ADP employment data.
We’ll also get ISM Manufacturing in the US session. And watch out for Crude Oil Inventories. The API data saw a surprise build and we get the official EIA number today. If that follows suit, we can expect some more downside pressure in oil.
Forex Signal Update
The FX Leaders team had another relatively neutral day, finishing up three and three. As the week continues to build, expect plenty more action.
EUR/CHF – Active Signal
The EUR/CHF has been grinding lower in a relatively subdued fashion. The EUR has generally been a little soft since Mario Draghi gave one of his classic dovish performances at the last ECB meeting.
We’re short in what is generally a great pair to be trading. A little bump in CPI help us with the entry and we will be looking for some further EUR weakness or even risk-off buying in the CHF.
Bitcoin – Pending Signal
Bitcoin has started to show some signs of weakness and has cracked through the $8,000 level. There have been reports that South Korean regulators are cracking down on tax breaks for exchanges. While there have also been headlines that some major financial institutions will be launching blockchain based LedgerConnect into their offerings.
Either way, Bitcoin is on the slide, but this might give the bulls a chance to find an entry.