As is typical for Fed days, especially one as anticipated as September’s get together, the markets were rather shy coming out of the gate.
Wednesday’s Fed statement is an interesting one. At the start of the month, the chance of a rate cut – according to the CME Group’s FedWatch tool – was as close to certain as you could get. Now it sits at 56.5%, itself a sharp decline from the 63.5% likelihood seen just yesterday. Improving relations between the US and China, a one-year high core inflation reading and surging oil prices have all helped cast doubt on the Fed’s next move, making trading the meeting far trickier than, say, its July’s counterpart. As for whether or not Jay Powell and his peers will give a hint about their future path, that’s even less clear.
With Brent Crude settling, for now, at $64.60 per barrel, and its miners rebounding after yesterday’s losses, the FTSE eked out a 0.2% increase, enough to lift it above 7330. The DAX dipped 0.1% to remain the wrong side of 12400, while the CAC started unchanged at 5615. Looking ahead to the afternoon and the Dow Jones is expected to echo its European opening act, the futures suggesting a 0.1% decline.
Ahead of a UK inflation reading expected to drop from 2.1% to 1.8%, and with no movement on the Brexit logjam, the pound trickled lower on Wednesday. Against the dollar it was down 0.3% and back at $1.247, while against the euro a 0.2% decline kept it under €1.128.
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