WEDNESDAY IS FED DAY
One of the month’s most highly anticipated events will take place on Wednesday, as the Federal Reserve unveils its latest policy decision. Although no change in policy is expected, the official statement may reveal clues about the likelihood of a December rate hike. For the vast majority of traders, a December liftoff is a foregone conclusion, according to the CME Group’s 30-day Fed Fund Futures prices.
PMI data courtesy of IHS Markit will make headlines beginning at 09:00 GMT with reports on Greek and UK manufacturing sectors. Very little changes are expected on either front.
In terms of monetary policy, the Bank of England’s Sir Jon Cunliffe is scheduled to deliver a speech at 10:00 GMT, one day after the central bank is expected to raise interest rates.
The North American session begins with ADP’s monthly employment report, which covers US private sector job creation. Private-sector employment is forecast to grow by 200,000 for October, following a gain of 135,000 the previous month.
Markit and the Institute for Supply Management (ISM) will also report on US manufacturing PMI between 13:45 GMT and 14:00 GMT.
Reports on construction spending and crude stockpiles will also influence investor sentiment on Wednesday.
Earlier in the day, Markit reported the final Nikkei Japanese manufacturing PMI for October. The reading of 52.8 was higher than forecasts.
Meanwhile, the Caixin China manufacturing PMI was unchanged at 51.
The Fed will conclude its policy meeting Wednesday afternoon, with an official rate statement scheduled for 18:00 GMT.
The USDJPY returned to strength on Tuesday, as markets favoured the greenback ahead of this week’s FOMC decision. The USD/JPY is currently trading around 113.85, having gained 0.2% from the previous close. The pair is in a firm uptrend extending back three weeks, but faces a major hurdle around the psychological 114.00 handle. Prices surged above that handle last week before retracing all the way back down to the low 113.00s. The 31 October low of 112.96 provides immediate support.
Europe’s common currency was little changed on Tuesday, as investors continued to evaluate the fallout from Catalonia’s independence movement. The EUR/USD exchange rate continues to trade in the low-to-mid 1.16 region. Prices were last down 0.1% at 1.1630. Immediate resistance is located at 1.1660. On the opposite side of the spectrum, the pair is likely to find support at 1.1590.
The Bank of Canada’s dovish posturing last week has driven a nail into the loonie. The USD/CAD extended its uptrend on Tuesday, hitting 1.2900 for the second time in three sessions. The USD/CAD is currently trading near three-month highs, with the pair eyeing further gains in the wake of the Fed announcement later in the day.