USD In a Narrow Range Awaiting FOMC Statement

Market Reviews

The US dollar is trading in a narrow range against major currencies awaiting the results of the two-day meeting of the Federal Reserve. Still, the US dollar and Japanese yen are trading as the weakest ones on strong risk appetite. Australian dollar and New Zealand dollar are the strongest ones. Canadian dollar dips amid oil prices fall.

On stock markets, overnight, DOW closed up 2.13% at 26180.30. S&P 500 gained 2.12% while NASDAQ rose 2.64%. In Asia, Nikkei closed up by 1.82% at 22486.92, Hong Kong HSI added 0.76%, Singapore Strait Times gained 0.90%, China Shanghai SSE added 0.07%.

It is widely expected, that the US central bank will keep its interest rates unchanged at 2-2.25%, but investors will wait for possible signals about the prospects for US monetary policy. The November meeting is not extended, that is, it will not include the publication of economic forecasts and press conference of the chairman.

The Bank of Japan released the summary of opinions at October 30-31 monetary policy meeting today. The central reiterated that the economy is “likely to continue expanding”. It noted “positive momentum in domestic demand”. The September Tankan survey also “reconfirmed enterprises’ strong fixed investment stance”. On inflation, BoJ maintained that CPI is “likely to continue accelerating moderately” but the developments have been “weak and unstable”. And, “rise in inflation has been delayed with a positive output gap” as inflation mechanism is becoming “complex”.

Today’s data showed, that China exports rose 15.6% yoy in October to USD 217.3B. Imports rose 21.4% yoy to USD 183.2B. Trade surplus widened to USD 34.0B, below expectation of USD 36.3B. In CNY terms, exports rose 20.1% to CNY 1490B. Imports rose 26.3% to 1257B. Trade surplus widened to CNY 234B, above expectation of CNY 209B.

Japan machine orders dropped -18.3% mom in September versus expectation of -8.9% mom. Current account surplus narrowed to JPY 1.33T. UK RICS house price balance dropped to -10 in October, down from -2 (the weakest reading since September 2012).