On Wednesday, the stock indices of America have not shown a uniform dynamics and closed mixed after a low volatility session. The Dow Jones rose by 0.19% (22412.59), S&P 500 added 0.06% (2508.24), the Nasdaq dropped 0.08% (6456.04). European markets showed similar dynamics. The German DAX gained 0.06% (12569.17), British FTSE 100 fell by 0.05% (7271.95).
Today it is expected a few publications of the macroeconomic data and the speeches of the monetary authorities that could affect investors' decisions during the trading sessions.
At 01:45 MSK New Zealand GDP
At 06:00 MSK the Report on monetary policy by Bank of Japan
At 06:00 MSK interest rate Decision Bank of Japan
At 08:10 MSK Speech by RBA Lowe
At 09:30 MSK Press conference of the Bank of Japan
At 11:00 MSK Monthly report of the ECB
At 11:30 MSK the mortgage approvals BBA
At 12:30 MSK the speech of the ECB Prata
At 15:30 MSK the Number of initial applications for unemployment benefits USA
At 15:30 MSK the manufacturing Index Philadelphia fed in September
At 15:30 MSK the unemployment claims Philadelphia fed Sep
At 15:30 MSK the Volume of wholesale sales in Canada for July
At 16:30 MSK the ECB President Draghi speaks
Yesterday as expected stock markets of the world were traded with a low volatility due to expectations of the fed meeting and the comments of Janet Yellen. Intraday movement was not particularly sharp, as statistics data mostly was close to expectations. The exception were imports and exports of Japan. Trade balance of this country amounted to 114 billion yen, that is significantly above the expected 94 billion yen. Investors were pleased also with the producer price index of Germany, which in August rose by 0.2%, it is twice then forecasted value of 0.1%.
Macro data has not led to significant movements in the European markets, which closed before the main event yesterday, the closure of the meeting of the fed. So it will have impact for the matkets today. As it was expected by market participants, the key rate of the U.S. remained at the same levels in the range of 1.00 to 1.25%. More important information contained comments to this decision and the disclosure of plans for further steps in monetary policy. Thus it was made an assumption that rates will hike one more time before the end of this year despite of low inflation, and that "appropriate" range of rates is in within the levels of 1.25-1.50 %t. In 2018, according to the regulator, it is expected about three times of rate hike. Important news was the message about the beginning of the next month reducing balance of Treasury bonds and securities, which secure with mortgage loans. Their volume currently amounts to $4.2 trillion. Fed Chairman Janet Yellen said that "our balance sheet will be reduced gradually, and predictable", but it is not more than $10 billion monthly. It was also said that the amount will increase quarterly until reaching $50 billion per month.
The market reaction was expressed in the jump volatility, as stock as currency markets. The dollar firmed, but remained in the range of the previous week. The index of wide market fell below 2500, but it had recovered by the end of the session to previous levels.
US Department of energy has published official data on oil reserves, which dropped to 4,591 million Barr., which was above the expected level 3,493 million barrels. However, the price of oil continued to rise, and she managed to reach the target level 50,75 dollars. per barrel for WTI. Now the price has gone into a technical correction. Investors took profits and awaited the outcome of meetings of OPEC+ this Friday in Vienna.
Sincerely, Global FX chief analyst Sergey Melnikov.