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All Eyes on the Fed | Oil Up, USD Down as Markets Await FOMC

Published September 20, 2017
  • The U.S. Federal Reserve will announce at 2PM EST today whether it will raise interest rates for the 3rd time this year, or hold off until conditions are more suitable. The Fed is wedged between tepid U.S. inflation and a global economy that seems to be on the rebound
  • The Fed’s policy statement will be scrutinized for its depiction of inflation, and updated economic forecasts from policymakers will also be in focus given the recent deluge of lukewarm domestic data out of the U.S. Expectations are that Yellen will likely suggest any decisions remain dependent on data
  • While markets aren’t expecting an increase in rates, there is the anticipation of an announcement regarding the timing of the first stage of Federal Reserve balance sheet normalization / tapering (unwinding its $4.5 trillion portfolio of government securities) which is slated to start in October
  • The Canadian dollar edged higher overnight as the greenback broadly fell ahead of today’s Fed statement (USDCAD -0.37% to 1.2246 @ 9:40AM EST)
  • Cable nears 15-month highs as strong August retail sales (Actual: 1.0% vs. Forecast: 0.2%) in the UK caused market participants to strengthen their belief that the Bank of England could announce a rate hike at its meeting in November
  • Oil continued higher this morning after Iraq’s oil minister said OPEC and other crude producers were considering extending or even deepening a supply cut to curb a global oversupply. WTI crude is up 0.26% to $50.48 (9:12AM EST), and Brent is up 1.18% to $55.79 (9:12AM EST)