Headed into one of the most highly anticipated FOMC decisions in recent memory, there was a wide expectation that the FOMC would cut interest rates by 25bp to a target range of 1.75–2%. 

Sure enough that’s what we saw yesterday, but the guidance, as we thought it might, painted a very different picture. The FOMC was clearly mixed on the current rate cut with only a 7-3 vote in favour while the outlook is not one that appears to be dovish anymore.

The Federal Reserve has been cutting rates at a time that the US has been ramping up its battles against China and the reality is that higher taxes on imports will clearly impact the US economy negatively.

So for now, it looks like Powell and his men are preparing to stop the cuts and will reassess. The economic data has been showing much improvement recently although Powell did say he would only stop cutting, “when we think we’ve done enough”.

So the question today turns to some of the other of the world’s major central banks to see if they will follow suit.

Both the BOE and SNB are releasing their official interest rate decisions, however, there is no expectation for a cut in rates. So again, our focus will turn to the guidance. At the moment we are expecting both to remain the same, but we must be prepared for anything in this environment it seems. As such, look for the GBP/USD and USD/CHF to be in-play today.

Forex Signal Update

The FX Leaders Team finished with 1 win from 2 signals, as markets were quiet headed into the FOMC.

Gold – Pending Signal

GOLD has dropped off sharply thanks to the latest FOMC rate cut, but the bottom is yet to fall out of the yellow metal just yet.  While $1500 has dropped, we are still seeing support around current levels and we could well be in for a bounce given the outlook. But if these recent lows get taken out, we could see sellers.

USD/CAD – Pending Signal

The USD/CAD has been busy this week given the headlines hitting the WTI market. Price is continuing to rally and we are hunting for a long signal here today.

Cryptocurrency Update

It has been the same old story again for BTC as the major coins have been rallying while Bitcoin lags with low volatility.

Ripples XRP has continued to surge higher, while ETH and LTC both followed suit.

Again the alt-coins are the star of the show and it appears BTC continues to be asleep at the wheel. If anything, price is weakening in the crypto-leader and a real test of $10,000 looks likely.