We must continue having a very prudent approachEnvironment is quite uncertainGrowth in H2 won’t be very different from Q2Risks from fiscal policy are becoming more tangibleGrowth risks are now much more balancedValuation of markets are very elevatedWe have to accept small deviations from the inflation goalWe already got his views yesterday here and he’s obviously not saying anything new here. This article was written by Giuseppe Dellamotta at investinglive.com. Source: investinglive.com (Read Full Article)

BofA notes that the BOE is widely expected to keep the bank rate unchanged today at 4.00%. While labour market conditions have softened, there’s no sign of a sharp deterioration just yet. And that reduces any urgency for aggressive easing action. That especially as the July inflation numbers and risks to prices in the medium-term argue against back-to-back rate cuts.The firm adds that the central bank should continue to reaffirm a more gradual and careful approach, while emphasising concerns over persistent inflation pressures. As for the more interesting part of the decision today, it could be in the bank rate vote.In the vote today, BofA expects it to be at 7-2 with Dhingra and Taylor set to dissent by voting for a rate cut. However, they see a risk of Ramsden joining that camp to skew the vote outcome towards being 6-3. Overall, it’s not going to be much of a difference but it certainly keeps things interesting especially after the split in August that required a second round of voting.Given that there was already some hawkish bias in the August meeting, BofA sees that should also translate somewhat to September amid “slightly higher” inflation. And that should reinforce caution by the central bank in communicating their decision today. This article was written by Justin Low at investinglive.com. Source: investinglive.com (Read Full Article)

The Fed wasn’t as dovish as market players would’ve hoped but they most certainly didn’t take anything away from the market pricing before the decision yesterday. Traders are holding steadfast in expecting ~45 bps of rate cuts by year-end and as mentioned earlier, the FOMC meeting had a little something for everyone and the onus is on US data to change what has been priced in.The dollar was firmer earlier in the day but has given back some of the gains with EUR/USD back up to 1.1825 from around 1.1780 earlier. Meanwhile, gold is also flat at $3,660 currently after having touched a low of $3,634 just a couple of hours ago. The turnaround is being led by equities though, which have been ramping higher ever since Asia trading. S&P 500 futures are now up 0.8% on the day:You can see the kind of volatility that we got during the Fed decision and into the US close yesterday. But ever since then, it’s been a steady ramp higher for stocks as investors are taking to the mantra of buy now, worry later. As mentioned above, the onus is on US data to change the market perception and Fed outlook for the month(s) ahead.We won’t have to wait too long though. There is the weekly initial jobless claims data coming up later today but the big one will only come on 3 October via the next non-farm payrolls report. This article was written by Justin Low at investinglive.com. Source: investinglive.com (Read Full Article)

There’s been a popular narrative throughout the year about Fed’s Waller and Fed’s Bowman. Both of them were apppointed by Trump in his first term and given that they started to call for rate cuts before all the other governors, people started to think that they were led by political reasons.In reality, Waller and Bowman were the only ones right about the labour market. Waller in particular has been making very good cases for rate cuts and his forecasts proved to be right. He expected inflation to reach 3% and then dissipate, and he called for rate cuts because he was expecting more weakness in the labour market. Inflation did rise to 3% (although we still don’t know if it’s going to dissipate) and the labour market did weaken more than expected.The narrative about the Fed losing independence because of Trump appointments took a big hit yesterday. In fact, the FOMC showed unity since all the voters voted for 25 bps cut and only one voted for 50 bps. The one voting for 50 bps was Miran. Miran was also the only one projecting 6 rate cuts by year-end. Miran was of course driven by political reasons, but since he’s been basically emarginated from the rest, what he does or says in the next months won’t matter at all.Going back to Waller and Bowman, they voted for 25 bps despite calling for a rate cut already in July. Since then we got two consecutive soft NFP reports and despite that, they decided to vote for just 25 bps alongside their colleagues. This showed unity and independence. People also forget that Powell was also appointed by Trump and despite that, he kept running monetary policy independently. Trump’s attempt to fire Fed’s Cook is also looking like it’s not going to work. We are now even getting reports that the US Treasury Secretary Bessent made similar mortgage claims cited by Trump to fire Cook. So, even if next year we get a lackey as Fed Chair, the FOMC will still be independent as monetary policy is decided on a majority basis. This article was written by Giuseppe Dellamotta at investinglive.com. Source: investinglive.com (Read Full Article)

Markets are still largely digesting the Fed decision from yesterday but so far in European trading, it’s been a case of fading the overnight moves. The outcome of the FOMC meeting had a bit of something for everyone and traders look to be erring to the side of sticking with the status quo in the run up to the Fed this week. That at least for now, with the US weekly initial jobless claims also still to get through later.Gold traded down earlier to a low of $3,634 and that threatened to see a near-term downside break. The drop saw price fall below both its 100 (red line) and 200-hour (blue line) moving averages for the first time in four weeks. But alas, it is looking like that could just be a false breakout. Now, we’re seeing price action move back up above both key near-term levels as buyers wrestle back near-term control:The thing about the Fed decision yesterday is that while it wasn’t that dovish, the details don’t really take away much from what markets have priced in before this week. As such, the bigger picture outlook remains the same until US economic data releases in the weeks ahead prove otherwise.Typically once the Fed begins to ease monetary policy, they tend to keep that going. So, that is something to keep in mind as well. For gold, that could yet keep the upside leg running with many houses now calling for a push to $4,000 next.That being said, I still wouldn’t rule out a short-term pullback before we start to get into the stronger seasonal months in December and January. This article was written by Justin Low at investinglive.com. Source: investinglive.com (Read Full Article)

Fundamental OverviewThe USD yesterday weakened across the board on the Fed’s decision but eventually erased all the losses and increased the gains as traders digested all the information and realised it was more hawkish compared to the market pricing. In fact, the dot plot showed that the FOMC projected two more rate cuts for 2025 by a narrow majority, with the rest of officials expecting just one more or even none. Moreover, the Fed projected just one cut in 2026 compared to three that the market was pricing before the decision.Fed Chair Powell then labelled the rate cut as a “risk management” action given the weakening in the labour market data. But overall, he sounded pretty neutral even though he understandably placed more emphasis on the labour market given the two consecutive soft NFP reports. Looking forward, it’s going to be all about the data. Strong data will likely trigger a hawkish repricing in interest rates expectations and support the greenback. On the other hand, weak data will likely continue to weigh on it. On the AUD side, the RBA cut interest rates by 25 bps as widely expected at the last meeting but didn’t offer much in terms of forward guidance, although their focus switched more towards the labour market. The employment report today missed expectations, but the unemployment rate held steady. All in all, it was slightly weak but nothing that should prompt the RBA to cut rates. In fact, the market pricing remained unchanged with an 82% probability of no cut at the upcoming meeting and 30 bps of easing by year-end. AUDUSD Technical Analysis – Daily TimeframeOn the daily chart, we can see that AUDUSD eventually extended the rally into the top trendline where we got a rejection as the sellers stepped in. We have an upward trendline defining the bullish momentum and if we get a pullback into it, we can expect the buyers to lean on the trendline with a defined risk below it to position for a rally into new highs. The sellers, on the other hand, will look for a break lower to increase the bearish bets into the 0.6350 support zone. AUDUSD Technical Analysis – 4 hour TimeframeOn the 4 hour chart, there’s not much we can glean from this timeframe, so we need to zoom in to see some more details.AUDUSD Technical Analysis – 1 hour TimeframeOn the 1 hour chart, we can see that we have a significant support zone around the 0.6635 level. We probed below it but eventually rallied back above it. The buyers will likely continue to step in around the support to keep targeting new highs, while the sellers will look for a break lower to increase the bearish bets into the major trendline. The red lines define the average daily range for today. Upcoming CatalystsToday we get the latest US Jobless Claims figures. This article was written by Giuseppe Dellamotta at investinglive.com. Source: investinglive.com (Read Full Article)

Prior 4.00%Bank rate vote [cut-unchanged-hike] 2-7-0 vs 2-7-0 expected (Dhingra, Taylor voted to cut by 25 bps)Underlying disinflation has generally continued, although with greater progress in easing wage pressures than pricesPay growth remains elevated, but has fallen and is expected to slow significantly over the rest of the yearUpside risks around medium-term inflationary pressures remain prominentDownside domestic and geopolitical risks around economic activity remainA gradual and careful approach to the further withdrawal of monetary policy restraint remains appropriateThe restrictiveness of monetary policy has fallen as the bank rate has been reducedMonetary policy is not on a pre-set pathThe timing and pace of future reductions in the restrictiveness of policy will depend on the extent to which underlying disinflationary pressures continue to easeFull statementPretty much everything is as expected with the bank rate vote also reflecting what markets were thinking coming into the decision. Dhingra and Taylor remain the two more dovish members, advocating for a 25 bps rate cut. However, there was no drama like we saw in August with regards to the decision today.As for the statement language, the key parts from August are all retained as the central bank reaffirms a more gradual and careful approach in pursuing further rate cuts. So, there’s not really anything new for traders to act upon here. This article was written by Justin Low at investinglive.com. Source: investinglive.com (Read Full Article)

Fundamental OverviewThe USD yesterday weakened across the board on the Fed’s decision but eventually erased all the losses and increased the gains as traders digested all the information and realised it was more hawkish compared to market pricing. In fact, the dot plot showed that the FOMC projected two more rate cuts for 2025 by a narrow majority, with the rest of officials expecting just one more or even none. Moreover, the Fed projected just one cut in 2026 compared to three that the market was pricing before the decision.Fed Chair Powell then labelled the rate cut as a “risk management” action given the weakening in the labour market data. But overall, he sounded pretty neutral even though he understandably placed more emphasis on the labour market given the two consecutive soft NFP reports. Looking forward, it’s going to be all about the data. Strong data will likely trigger a hawkish repricing in interest rates expectations and support the greenback. On the other hand, weak data will likely continue to weigh on it. On the CAD side, the BoC cut interest rates by 25 bps as expected following the very weak Canadian employment report. Overall, the central bank stressed the need to remain attentive to risks and setting policy on a meeting-by-meeting basis. The market pricing remained largely unchanged with 19 bps of easing priced in by year-end and 60% probability of no change at the upcoming meeting in October. Summary of BoC and FOMC decisionsUSDCAD Technical Analysis – Daily TimeframeOn the daily chart, we can see that USDCAD dropped all the way back to the 1.3720 level. This support could also be the neckline of the head and shoulders pattern formed at the 1.3862 resistance. The buyers will likely continue to step in around the support with a defined risk below it to position for a rally into the 1.40 handle. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 1.3540 low next.USDCAD Technical Analysis – 4 hour TimeframeOn the 4 hour chart, we can see that we have a minor downward trendline defining the bearish momentum. The sellers stepped in around the trendline with a defined risk above it to target a break below the neckline. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 1.3862 resistance next.USDCAD Technical Analysis – 1 hour TimeframeOn the 1 hour chart, we can see that we have a minor support zone around the 1.3765 level. This is where we can expect the buyers to step in with a defined risk below the support to position for a rally into the 1.3862 resistance. The sellers, on the other hand, will look for a break lower to increase the bearish bets into the 1.3720 support targeting a breakout. The red lines define the average daily range for today. Upcoming CatalystsToday we get the latest US Jobless Claims figures. Tomorrow, we conclude the week with the Canadian retail sales data. This article was written by Giuseppe Dellamotta at investinglive.com. Source: investinglive.com (Read Full Article)

Economic growth is coming without inflationMiran’s analysis is ‘heartfelt’ and not affected by politics (sure bud…)No knowledge of Nvidia stake deal similar to Intel arrangementRare earths were a potential bottleneck for the US economyFocused this week on American farmersThat’s a nice joke about Miran’s analysis. Miran projected 6! rate cuts by year-end but sure, it wasn’t affected by politics. This article was written by Giuseppe Dellamotta at investinglive.com. Source: investinglive.com (Read Full Article)

Headlines:US futures continue to ramp higher on the sessionBOE leaves bank rate unchanged at 4.00% in September monetary policy decisionWas the Fed decision dovish or hawkish? Let’s see what we got compared to market pricingFed decision has a little bit of something for everyoneECB’s de Guindos: Present policy stance is appropriateEurozone July current account balance €27.7 billion vs €35.8 billion priorSwitzerland August trade balance CHF 4.01 billion vs CHF 4.59 billion priorMarkets:EUR leads, NZD lags on the dayEuropean equities higher; S&P 500 futures up 0.7%US 10-year yields down 1.6 bps to 4.060%Gold up 0.2% to $3,666.78WTI crude up 0.4% to $64.31Bitcoin up 1.3% to $117,178Markets continued to digest the Fed decision from yesterday for the most part in European trading today. And with all else happening, it seems that market players are leaning towards wanting US data to prove their Fed pricing wrong. As such, it was a case of carrying on as you will – at least before we get to US trading today.Equities bounced back with US futures pointing to solid gains at the open later. S&P 500 futures are up 0.7% with tech shares leading the way, as Nasdaq futures are up 1.0%. That is helping to see European indices jump up as well with the DAX and CAC 40 posting over 1% gains on the day.In FX, the dollar was firmer earlier on but has lost some ground during the session. EUR/USD fell to 1.1780 earlier in the day but is now trading back up slightly to 1.1820 with the high earlier touching 1.1848. USD/JPY is steadier though, seen up 0.3% to 147.40.Meanwhile, GBP/USD is down after the BOE kept its bank rate unchanged at 4.00%. The pair was holding around 1.3650 earlier but is now down 0.1% on the day to 1.3611 despite not much meaningful change in the BOE communique.NZD/USD is the laggard, down 1.0% to 0.5901 after a more dismal NZ Q2 GDP from earlier in the day.Elsewhere, we are seeing gold also recover some poise after dropping to a low of $3,634 during the session. The precious metal is back up by 0.2% to $3,666 now with dip buyers moving quickly as the post-Fed musings continue to play out.With the focus returning to US data to either reaffirm market expectations or invalidate them, we’ll have a quick test of that later today from the US weekly initial jobless claims. So, that could yet sway the post-Fed mood before we get to the weekend later this week. This article was written by Justin Low at investinglive.com. Source: investinglive.com (Read Full Article)