Dow Jones Stumbles and Reverses on Fed Unchanged Interest Rate

The US federal reserve released their quarterly interest rate decision in the United States. They left rates on hold for the next period but hinted at a rate hike maybe on the cards before the end of this year.

Once again the Federal Reserve suggested that interest rates are due to rise again. Even though inflation has been falling this year, which was an admitted surprise, reporters were told on Wednesday that the economy is strong enough to handle another hike. Janet Yellen suggested they expect that the strength of the economy will warrant further increases in rates.

The federal reserve also suggested that the economy is strong enough to begin reducing the balance sheet. The $4.5 trillion balance sheet which came about from the stimulus program when the economy and recession hit, will begin unwinding in October.

According to the Fed. Business is getting stronger, hiring is strong, people are spending once again and projected a healthy 2.4% growth this year.

While the signs for further interest rate increases are apparent the Fed did not change the base rate yesterday. We can probably expect another rate increase by the end of this year, and three more are expected as we move into 2018.

Even though the stock market took an initial small tumble on the news that rates were left on hold, they soon recovered and ended higher, with the Dow Jones making (yet) another all time high.

Gold prices reacted strongly to the downside on this news. It immediately fell and broke the magical $1300 barrier. Whilst $1300 is not a major support, it is a round number and a significant number to break.It remains to be seen whether Gold can recover and attack the August highs again.

US dollar was strong after their interest rate announcement. US dollar versus the Japanese yen rose 112.50, and seems like the trend is most certainly up for the foreseeable future.

from http://www.livecharts.co.uk/livewire/2017/09/dow-jones-stumbles-and-reverses-on-fed-unchanged-interest-rate/

CAD: Canadian Dollar Strength and US Dollar Weakness

On the foreign exchange market Wednesday things began slowly. Mixed moves from the major currencies meant choppy trade until data from the West arrived.

Things became more volatile as the Bank of Canada (BoC) moved rates by 0.25 to 1%. This sparked some life into the Canadian Dollar, and in turn its US cousin. A swift move of over 250 pips ensued for the USDCAD pair, as it hit a low on the day of 1.2129.

Overnight weak trade balance data out in Australia couldn’t really dampen the spirit of the AUD. Which held in the high range, 0.8000, against the US Dollar. That could come in to scrutiny today as US unemployment data arrives, and could breathe some life into the current weak greenback.

But today is all about the Euro. After midday UK time today the ECB will announce the minimum bid rate, and will be followed by a meeting and press conference. Draghi is most likely going to shed some light on the ECB’s thoughts on the Euro, and a strong address could see some volatile moves as the US opens for trading.

The weakness in the US Dollar also helped Cryptocurrency Bitcoin gain some ground. After 4 down days, a little light relief came as the price of Bitcoin headed back towards the early month high.

From a technical perspective Bitcoin seems to have re-tested the previous high, possibly creating an area of support. If it can now go on to make a new high, then maybe just maybe this rally is not yet over. The chart below shows the level clearly.

Ethereum was making similar moves, mirroring the strength in Bitcoin and aided by a weaker US dollar. Again the last two days have seen it make a back test of the early August highs, and is now making a move up once again. Whether new highs will follow remains to be seen.

from http://www.livecharts.co.uk/livewire/2017/09/cad-canadian-dollar-strength-and-us-dollar-weakness/