Article Highlights

  • U.S. federal budget deficit at $136.7B vs. $99.5B expected, $44.2B previous
  • New Zealand manufacturing sales up 0.4% in Q3 vs. 1.8% previous
  • Dow 30 index hit a new record high, S&P and Nasdaq closed lower
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The lack of economic reports from Uncle Sam left the Greenback in a weak spot against its rivals as traders priced in their expectations for this week’s FOMC statement.

Major Events:

Mixed U.S. equities – The Dow 30 index hit another record high for the 15th time since the U.S. elections last month, closing at 19,796.43 (0.20%). Meanwhile, the S&P 500 index closed 2.57 points down to 2,256.96 (-0.11%) and the Nasdaq retreated 31.96 points to 5,412.54 (-0.59%).

Market watchers continue to monitor Fed fund futures to gauge the probability of an interest rate hike, which currently stands at 97%. With a tightening announcement in the bag, traders are turning their attention to how the dot plot forecast of interest rate projections might change this time around and how Trump’s victory could impact monetary policy biases moving forward.

Improved risk sentiment – Positive developments in the previous trading session lifted higher-yielding currencies and caused U.S. yields to retreat. For one, reports that the Italian government would be willing to bail out Monte dei Paschi di Siena eased fears of a banking sector crisis in the country, even as political uncertainties remain.

Apart from that, U.K. Chancellor Hammond supported the idea of a longer Brexit transition in order to minimize disruptions in businesses and banking activity. He emphasized the need to have these arrangements discussed in the negotiations with EU officials. Meanwhile, sources revealed that members of the EU panel are actually considering European citizens living in the U.K. under EU law in order to protect the existing rights of roughly 3 million individuals.

Major Market Movers:

USD – The scrilla ended the day sulking against its rivals as forex junkies may be starting to book profits way ahead of the Fed decision.

USD/JPY found resistance near the 116.00 handle then slid to 114.86, EUR/USD popped up from 1.0603 to 1.0652, GBP/USD climbed from 1.2583 to 1.2697, and USD/CHF tumbled from 1.0155 to a low of 1.0124.

Watch Out For:

  • 12:30 am GMT: Australia HPI q/q (2.6% expected, 2.0% previous)
  • 2:00 am GMT: Chinese industrial production y/y (6.1% expected, 6.1% previous)
  • 2:00 am GMT: Chinese fixed asset investment ytd/y (8.3% expected, 8.3% previous)
  • 2:00 am GMT: Chinese retail sales y/y (10.2% expected, 10.0% previous)

See also:

London Session Recap

Asian Session Recap

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!