All eyes are upon Washington D.C. this week, with the October FOMC meeting and Trump impeachment proceedings scheduled to commence. Although the outcomes of both events have been largely priced into the markets, significant forex volatility is still a concern. Moving forward, it appears that broad-based economic and political “uncertainty” will be a primary theme throughout Q4 2019.

FOMC Cuts Rates By ¼ Point

At 2:00 PM EST, the FED Interest Rate Statement was issued to the public. The result was another ¼ point reduction of the Federal Funds Target Rate (1.50-1.75%), the third consecutive cut. Below are a few of the highlights of today’s official FED statement:

• “On a 12-month basis, overall inflation and core inflation are running below 2%.”
• “Business fixed investments and exports remain weak.”
• “Uncertainties about the economic outlook and inflation levels remain.”
• “The Committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the federal funds rate.”
• The FOMC voted 8-2 in favor of the ¼ point reduction.

Bottom Line: Similar to the Bank of Canada’s (BoC) statements from this morning, the FED is growing increasingly concerned over the sustainability of economic growth. While the U.S. economy continues to perform relatively well, today’s rate cut and cautious FED projections proof positive that FED officials see storm clouds on the horizon.

Trump Impeachment Vote Scheduled For Thursday

Tuesday brought the blockbuster testimony of Lieutenant Colonel Alexander Vindman in the Trump impeachment investigation. A purple heart recipient for his service in Iraq, Vindman confirmed that he reported the contents of a Trump/Ukraine phone call as inappropriate earlier this year.

Following Vindman’s statements, the House of Representatives Rules Committee publicly released plans to bring an impeachment resolution up for vote on Thursday or Friday of this week. If passed, a formal inquiry will begin, concluded by an official House Of Representatives vote to impeach or acquit. 

At this point, the impeachment proceedings are nothing new to the markets. According to odds from Predictit.org, there is about an 80% chance of the House of Representatives impeaching Trump. However, the real question is whether or not the Senate will convict Trump of any impeachable offenses. Current odds of that occurring stand at 22%. If this percentage begins to climb, be on the lookout for sweeping volatility across the equity, currency, and commodity markets beginning in early 2020.