FX Market quiet ahead of Fed Meeting

The U.S. Dollar is trading in mostly tight ranges with commodity-based currencies benefitting from the recent good run in equity and commodity markets.

Overview

Post-election markets rallied, which elevated counterparts to the greenback that had hit rock-bottom for the year. Swings and surprises have been the norm and we do not see a quiet calm end to it either for what is left of these two months. G-20 meeting at the end of this month will be crucial for understanding where global commerce is headed going into 2019.

Currently, we are awaiting the FOMC Meeting Announcement, which will not feature a press conference after it. It is expected that the Fed will just set the table for hiking once more in December, with chances of that occurring at 78.1%. Dollar flows will also be tied to any potential for good data out of Europe and the U.K. with GDP readings for both regions released next Wednesday and tomorrow respectively.

What to Watch Today...

  • • No major events scheduled for today

EUR

The Euro has sustained gains from this week regardless of dark clouds that could subdue its momentum, if not sink the currency. Italian Finance Minister Giovanni Tria met with European Central Bank President and fellow countryman Mario Draghi in order to receive advice on fiscal responsibility that could satisfy the EU’s budget requirements.

The Italian government has until November 13th to present new changes to their previously rejected budget. The deficit in revenue-creation and expenditures is a huge issue that may stay unresolved, thus hurting Euro long-term. We had foreseen appreciation by end of the year because of the ECB cutting off QE, but Italy is currently making us question the shared currency’s stability.

GBP

The Pound hit the brakes overnight as markets await a reaction to Theresa May’s Brexit deal proposals. Across the Atlantic many politicians and financial heads are saying that they hope something can be clarified and agreed upon soon.

Plans for companies to leave have actually accelerated and a particularly large one has already gone to Amsterdam from London. Short-term refinancing company CME Group Inc. moved its entire operations, representing a $240-billion-a-day market. November 21st is the deadline, just a friendly reminder.