Thursday September 19th, 2024

The USD remains under pressure, oil prices and equity markets are up while bond yield are mixed. After much anticipation, the Fed opted for an oversized rate cut as it gains greater confidence about inflation. However, Powell was quick to emphasize that 50bps cuts are not the new pace. Policymakers expect another 50bps cut in 2024, 100 bps cut in 2025 and 50bps cut in 2025.

In other news. A day after pagers used by Hezbollah explode across Lebanon, hundreds of walkie-talkies did the same yesterday. Israel have not commented on the blast other than to announce that it was entering a new phase in the war. Ammunition from India enters Ukraine, raising Russian ire. 'Massive' drone attack forces Russian authorities evacuate town, shutter schools. Venezuelan opposition candidate González said he was "forced" to recognise Maduro as the winner of July's disputed election before being allowed to seek asylum in Spain.

In currency markets. China yuan closes at near 16-month high on rising stimulus hope. The ZAR gained in early trading after super-sized interest rate cut by the Fed. Local investors awaited a rate decision by the South African Reserve Bank (SARB). The JPY gave up some ground (-0.55%) after the recent rally as market participants awaits the BoJ policy decision on Friday. Other Asian currencies continue to strengthen against the greenback – CNY +0.18%, THB +0.48%, MYR +0.87%. The AUD and NZD followed suits gaining +/- 1%. Not to be left behind, the trading currencies (ZAR and MXN) rallied 0.6%.

In commodity markets. Oil prices rallied 1.1% on the back of the Fed’s decision. Gold prices climbed 1% as the Fed embarked on an easing cycle propelling it to an all-time high. Silver prices climbed 3.79%. Both wheat and soybean prices are lower at the start of the trading day.

Current level USD Index 100.573 Down 0.02%

The USD/CAD remains under pressure following the overall USD weakness and accentuated by the rising oil prices.

Current level USDCAD 1.3546 Down 0.44%

After breaching the 1.5100 level, the EURCAD as remained in a tight trading range.

Current level EURCAD 1.5137 Up 0.08%

The EUR remains strong against the USD after yesterday’s rate cut and comments that the Fed expects another 50bps in 2024. Eurozone inflation being higher than the ECB would like it to be contributes to the stronger EUR.

Current level EURUSD 1.1174 Up 0.50%

The GBPEUR remains stable as the both the BoE and ECB are concerned about inflation.

Current level GBPEUR 1.1875 (.8418) Down 0.04%

The GBP is benefiting from the overall USD weakness and continue it’s move higher. BoE is set to announce its interest rate decision later today with the expectation that they will remain stable.

Current level GBPUSD 1.3265 Up 0.46%