This is a key day for the markets, with the spotlight firmly on the Federal Reserve. Later today, we’ll get the long-awaited FOMC interest rate decision, where a 25-basis-point cut is expected. It’s one of the most important events of the month, and traders are already positioning themselves ahead of it. But the Fed is not the only central bank in action today. The Bank of Canada is also set to cut rates by 25 basis points, bringing its benchmark to 2.5%. Earlier this morning, the U.K. released inflation figures at 3.8%, right in line with expectations. With no surprises there, the pound barely reacted.
Looking back, yesterday brought retail sales from the U.S., which came in stronger than forecast, but even that failed to help the dollar. Today, however, we’re seeing some modest strength in the greenback at the start of the European session, while the euro, pound, Australian dollar, and New Zealand dollar are all under pressure.
On the indices, the picture is mixed. American futures are pointing higher, continuing to climb, while Europe is struggling. The DAX in particular suffered a steep drop yesterday, breaking out of its pennant formation to the downside and slicing through a key uptrend line. That leaves European indices looking vulnerable compared to their U.S. counterparts.
Meanwhile, cryptocurrencies are having a stellar run. Both Bitcoin and Ethereum are pushing strongly to the upside, showing renewed investor appetite in the digital space. Commodities, however, are sending mixed signals. Oil continues to climb, adding to recent gains, but metals are showing cracks. Silver reached new mid-term highs yesterday before reversing sharply and extending losses in Asian trading. Gold painted a similar picture, printing fresh all-time highs before dropping significantly. Now gold sits at a critical horizontal support zone, and the mid-term outlook for the metal depends on how this level holds.