USD

Annualized GDP is expected to slow to 1.7% in the third quarter. This is down from 2.0% in the second quarter and 3.1% in the first quarter. The Fed will announce their rate decision later this afternoon around 2pm and traders are expecting the Fed to cut rates by 25bps to 1.50-1.75%. According to Fed FUND futures, there is a 97.8% chance of the rate cut. What everyone is waiting for is the statement from Fed Chair Jerome Powell following the rate announcement. Many believe that Powell will declare the end of the “mid-cycle adjustment” in his comments.

EUR

Germany will announce preliminary CPI numbers this morning, which are expected to show the economy slowing down. EUR is currently trading in a quiet range to this point. 

GBP

GBP firmed overnight after Parliament agreed to hold elections on December 12. There was no other Brexit news to report overnight.

JPY

Traders have stepped away from the JPY as a safe haven purchase for the moment as they await the FOMC announcement and continue to monitor the US-China trade talks.

CAD

The Bank of Canada will announce their rate decision later this morning and analysts expect the central bank to keep the policy rate unchanged at 1.75%. GDP and inflation numbers are stronger and with a new government in place, there is no apparent need for the central bank to act at this time. 

CNY

Reuters has reported that the US-China deal may not be ready for signing at the APEC summit on November 16-17. One obstacle is the amount of farm purchases that China will make from the US going forward. The US is reportedly seeking a commitment from China to buy as much as USD 50 billion of American farm products, while China would prefer a flexible number of farm product purchases.

Update - Fed lowers rates 25 bps

The Federal Reserve has lowered rates by 25 bps to the range of 1.50-1.75%, marking the third cut this year. In addition to the rate cut, the FED has removed the phrase “act as appropriate” from its statement. They instead stated their intent to set an appropriate path for interest rates. There were 2 dissenters to this decision. The FED stated they were motivated by global developments but did divulge whether the US labor markets remain strong. There has been no real reaction to this announcement by the stock market, but that could change after Chairman Powell’s press conference. We will discuss that in depth in tomorrow’s commentary.