MORNING BRIEFING: The Fed did ‘the right thing’.

[RTFX-Trading]

MORNING BRIEFING: The Fed did ‘the right thing’.

What’s new:
United States : Fed sees rates near zero for extended period.
China : to stick with pro-growth policies.
New-Zealand : NZ jobless at 9-yr high; central bank warns recovery slow
UK : BoE should raise QE by 50 bln gbp – Blanchflower
G20 to keep stimulus, launch global framework.

Today:


Rates in Asia and Indices:
EURUSD: 1.4883 – 1.4811.
USDCHF: 1.0193 – 1.0146.
GBPUSD: 1.6564 – 1.6467.
EURJPY: 135.18 – 133.36.
USDJPY: 90.52 - 90.05.
Dow Jones : 9’802 +0.31%.
NASDAQ: 2’055 -0.09%.
S & P 500: 1’046 +0.10%.
Nikkei: 9’717 -1.29%.
Shanghai; 3'117 +0.11%.
Gold: $1'087.
Crude oil: $79.60.
 
Comments:
The Fed did ‘the right thing’. They stated that they would maintain its current exceptionally low fed fund rates target for an extended period. Markets cheered and the risk bonanza returned. Stocks went up, the dollar down and everyone seemed happy.

Today is part two of an eventful week with the ECB and the BOE to assess their next policy steps. Whilst the ECB seems to be tilted towards a hawkish stance the BOE might increase their already loose steps by another notch. The G20 meeting is also starting but I don’t expect anything from there that could have a market moving impact.

Tomorrow’s US employment data are another focus. Yesterday’s ISM non-manufacturing employment sub-component showed a different picture than the ISM manufacturing number. Given that the US service industry produces much more jobs than the manufacturing sector there should be no optimism for better nonfarm payrolls tomorrow.

Good day.

Nicolas Longchamp
RTFX Ltd
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