Investors Holding Breath Before Fed Meeting, Oil and Shares Higher

Market Reviews

US shares have broadly surged. S&P 500 lifted 0.29% hitting the maximum of 2477.13. NASDAQ increased 0.02% and reached a peak of 6412.17. DOW rose 0.47% and settled at 21613.43. Oil prices also improved with WTI reaching a maximum of 48.66 and by that making loonie the firmest currency. 10 year yield increased 0.072 to close at 2.326. Japanese yen and Swiss Franc remain the softest currencies. Today, the Federal Reserve will have its meeting. Traders will pay much attention to members’ comments about inflation, Q2 data and the balance sheet tapering. The rate is expected to stay untouched.

International Monetary Fund said that policy tightening should be implemented only if inflation starts rising towards ECB’s target. Members added that impulse of the economic recovery is boosting, but downside risks and the possibility of a higher borrowing costs are still present. Hiroshi Nakaso (BoJ Deputy Governor) claimed that inflation will meet its objective in 2019 and that BoJ shouldn’t exit its stimulus program.

Australian Consumer Price Index was up 0.2% qoq in the second quarter. In annual terms, CPI dropped from 2.1% to 1.9% yoy. Trimmed mean CPI reduced from 1.9% to 1.8% yoy. Weighted median Consumer Price Index increased from 1.7% to 1.8% yoy. Philip Lowe (RBA Governor) sees no need in policy changes. John McDermott (RBNZ Assistant Governor) projects the neutral interest rate near 3.5%, output growth at 2.9% and core inflation at 1.4%. New Zealand trade surplus extended to 242 million kiwi in the prior month. Today, Swiss will announce UBS consumption, Britain will publish Gross Domestic Product of the second quarter and BBA mortgage approvals. The United States will show release new home sales.