The FOMC begins their two day meeting this morning as most market players expect the US central bank to lower interest rates tomorrow by 25 bps. Traders are focusing on earnings reports and today there are a number of them on tap. BP, MasterCard, Merck, Pfizer, and Kellogg are set to report before the bell and Mondelez International, Chubb and Amgen will report after the market closes. US Consumer Confidence for October will be released this morning at 10am EST, with the market expecting a number of 128.3, after last month’s 125.1.
EUR/USD traded lower overnight. At the present time, it seems the single currency is influenced more by outside forces (US data and FOMC meeting) than Eurozone economic data. No significant move is expected until after the FED rate announcement.
GBP/USD is trading higher after opposition leader Jeremy Corbyn announced his support for a December general election. With Parliament set to vote on the election and when to schedule it for, it appears the Prime Minister will achieve the election he has pursued these last few months. The EU has accepted an extension of Brexit until January 31, giving the UK an option to leave early if they can pass the Withdrawal Agreement, and eliminating the chance of a no deal Brexit within the next three months. This was the catalyst for Corbyn’s support for an election.
USD/JPY moved higher as traders have put safe haven currency trading aside for the time being. Japan CPI was unchanged at 0.5% year-on-year in October, which was well below the expected 0.7% year-on-year.
The Canadian Dollar is trading quietly ahead of the BOC meeting tomorrow. The BOC is expected to leave rates unchanged at 1.75%. Oil prices overnight were slightly lower but this did not seem to affect traders’ positions.
President Trump indicated on Monday that trade negotiations are ahead of schedule and a trade agreement could be signed at the APFC summit in Chile on November 16-17. The President announced the proposed Phase 1 agreement will “take care of farmers” and “also take care of a lot of banking needs”. It was also reported that the US was considering extending tariff exclusions of around $34 billion worth of Chinese imports.