The FOMC rate decision will be the major focus for traders today. The Fed is expected to keep interest rates unchanged at 1.50-1.75%. What traders will be looking at is the accompanying statement which should not be much different from the statement in December. Fed Chair Jerome Powell probably will not have much to say at his press conference and many feel the rate decision and press conference will be a non-event. According to Fed Funds Futures, there is an 87.3% chance of no change. Overall the USD moved higher overnight against both the EUR and GBP and a little weaker against the JPY. US equity markets rebounded yesterday after Monday’s fall, closing up 187 points. Dow Futures are higher this morning indicating a positive opening of around 70 points when US markets open later today. Several companies will report earnings today including AT&T, Boeing, General Electric, MasterCard, and McDonald’s, before the bell and Facebook, Microsoft and Tesla after the bell.
EUR/USD continues to head lower reaching levels not seen since early December. There is some positive news coming out of the Eurozone as the European Central Bank’s Governing Council shows the latest information on inflation signals a possible rise, but virus news and the FOMC decision are weighing on the single currency. Traders will continue to probe the downside as the EUR/USD approaches some technical support levels.
The GBP/USD also moved lower overnight, with the decision of Great Britain to allow equipment from Chinese telecom provider Huawei. This has helped improve relations with China but does not sit well with Washington. The US is not happy with this decision, but with Brexit looming, the UK is making deals and comments from the UK Chancellor of the Exchequer that the UK would prioritize a deal with the EU over one with the US is aiding to the Pound’s move lower.
USD/JPY continues to trade lower but it seems to be finding a base ahead of the FOMC rate decision as safe-haven trades appear to have slowed a bit. Traders are uncertain if the virus has finally been contained and until that has been confirmed they will remain wary of risk and continue to buy JPY.
The Canadian dollar continues to be under pressure as traders are pushing through USD/CAD technical levels. Adding to the loonie’s woes was the second confirmed case of the Coronavirus and the possibility of 3 other cases. With oil prices under pressure, commodity currencies are being sold off.
The Coronavirus cases continue to rise with confirmed cases now up to 5,974 in China and the global number is 6,058. There have been 132 deaths. This virus has now surpassed the amount of SARS cases in China from 17 years ago. According to a comment from the chief executive of Novartis, the Swiss pharmaceutical giant, it may take at least a year to find a vaccine to treat the virus. British Airways has suspended all flights to and from mainland China, stating the safety of their customers and crew is of top priority.