News & Analysis

Trump Comments at UN hurt the Dow; Silver pops; Federal Reserve rate decision and statement tomorrow morning

Sep 26, 2018 | Market Updates

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11:00 NZD ANZ Business Confidence
00:30 Oil Crude Oil Inventories
04:00 USD FOMC Economic Projections – FOMC Statement – Federal Funds Rate EXP rise to 2.25%
04:30 USD FOMC Press Conference
07:00 NZD Official Cash Rate EXP hold at 1.75% – RBNZ Monetary Policy Statement – RBNZ Rate Statement
08:00 NZD RBNZ Press Conference

Mixed session for U.S stocks with the Nasdaq adding 14 points, Amazon, Apple and Alphabet lead the index higher ignoring Trump’s comments at the UN that sent the Dow Jones and S&P500 lower from session highs. The Dow finished 69.84 points lower and the S&P500 closed 3.81 points in the red.

President Donald Trump said the U.S. “will no longer tolerate abuse” on trade. Trade Representative Robert Lighthizer also said the U.S. was prepared to move ahead on a trade deal with Mexico that excluded Canada.

“It was clearly an America First speech and one that will resonate in the midterms,” said Quincy Krosby, chief market strategist at Prudential Financial. “It does not mean there won’t be negotiations, but he’s underscoring that the U.S. is demanding a level playing field.” “This is going to be a long process,” said Krosby. “Until it is resolved, the market will continue to be drawn by headlines.”

The 10-year Treasury note yield climbed to 3.11%, near its highest level of the year. – CNBC The Federal Reserve meets tomorrow morning, rates are expected to increase to 2.25%

European markets finished higher basic resources and energy stocks led the gains. U.K. retailer Next jumped 7.6%. The retailer reported a 0.5% increase in first-half profit and a decision to lift its guidance for the year. The FTSE closed 49.15 pts higher and the DAX closed 23.84 pts higher after trimming earlier gains.

Oil extended gains adding 20 cents after President Trump called for OPEC to pump more lowering the current crude price. Trump also said the United States will put more sanctions on Iran following oil sanctions in November. USOUSD finished lower and is seeing further weakness this morning. Price failed to hold above $72.50 for the 2nd time.

Gold added $3 and continues to see support from 1197.50. Silver added 18.8, hitting 4-week highs. Price is trading at 14.46, breaking its med – long term downtrend from the daily chart.

The USD and JPY lost ground to the EUR and GBB but the AUD ended flat to the USD and gained to the JPY. The USD gained to the Yen adding 20 pips and testing higher into the supply zone. The USD closed flat to CAD, it looks like commodity currencies where mainly out of favour overnight due to risk increasing to a mainly weaker USD.

The FED comes into play tonight, the market is expecting a rise in rates from 2.00% to 2.25%. “As a rate increase is highly likely and therefore priced in, the reaction of the dollar will be influenced to a large degree by the Fed’s forward guidance and whether there are any noticeable changes in the ‘dot-plots’,” said Fawad Razaqzada, market analyst at in London.

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Sources; CNBC – All times are AEST

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