Traders looking for ‘code’ from the FOMC minutes
Tuesday continued the mini slump global equities markets have suffered over recent days with the USA indices falling to a six week low. Once again fears that the USA Fed will curb its bond purchases, as early as next month, continued to stalk the markets and cause jitters. The nervousness was perhaps best illustrated by the reaction of the DJIA which at one point in the New York afternoon session rose to 15074 to finally close down just above the crucial ‘psyche level’ of 15000 at 15002.
European markets also lost ground in the two trading sessions on Tuesday with all major indices finishing in the red; the STOXX index fell 1.25%, the UK FTSE fell 0.9%, the CAC fell 1.35%, DAX by 0.69%, IBEX down 1.79%, and the PSI closed down 1.77%. Once again the Athens exchange fell by the most, closing down 3.33% on the day.
Equity index futures
Looking towards Wednesday the equity index futures are currently offering little in the way of cheer for Wednesday’s sessions. The UK FTSE equity index future is currently down 0.24%, the CAC equity index future is down 1.31%, with the Athens exchange index down 3.81%. The DJIA equity future is flat, as is the SPX and the NASDAQ.
Commodities suffered falls on Tuesday; ICE WTI oil fell by 1.64% to $105.11 per barrel. NYMEX natural fell by 0.67% to $3.42 per therm. COMEX gold fell by 0.30% to $1368.5 per ounce, whilst silver slipped on COMEX, by 0.42% to $23.02 per ounce.
Forex focus
The euro gained 0.6 percent to $1.3417 late in the New York session and touched $1.3452, the highest level seen since Feb 14th. The seventeen nation common currency rose by 0.3 percent to 130.51 yen. Japan’s currency appreciated 0.3 percent to 97.27 per dollar after advancing to 95.81 on Aug 8th, the strongest level since June 19th. Switzerland’s franc climbed 0.7 percent to 91.73 centimes versus the dollar. The franc advanced 0.1 percent to 1.2309 per euro. The greenback declined after the Federal Reserve Bank of Chicago’s national activity index for July was minus 0.15 from a revised minus 0.23 in June.
The kiwi slumped by 1.1 percent to 79.79 U.S. cents on Tuesday, whilst the Aussie lost 0.4 percent to 90.71 cents. The Australian and New Zealand currencies slid due to comments from the nations’ central banks.
The loonie depreciated for a third day in succession, losing 0.5 percent to C$1.0392 per U.S. dollar in the Toronto session. It touched C$1.0401, the weakest level seen since Aug 8th. Part of the reason why the Canadian dollar fell to its lowest in almost two weeks was due to the nation’s biggest export, oil, sliding due to bets the Federal Reserve will slow monetary stimulus fueling demand for riskier assets as soon as next month.
Fundamental policy decisions and high impact news events for Wednesday August 21st
The USA leads the way in terms of high impact news events on Wednesday. Existing home sales in the USA are scheduled to print at 5.15 million. Crude oil inventories are expected to fall by 1.6%. Thereafter the FOMC minutes will be published with traders eagerly anticipating ‘code’ regarding tapering. The minutes are a detailed record of the FOMC’s most recent meeting, providing in-depth insights into the economic and financial conditions that influenced their vote on where to set interest rates.
Prior to the USA data the UK will publish its public sector net borrowing figures predicted to fall to £-3.7bn from the previous month of £10.2bn. A positive number indicates a budget deficit, a negative number indicates a surplus. This figure includes “financial interventions”, there is also a figure released at the same time which excludes them.
