18 Sept: WTI down 6% as Saudi production is restored. US$ lower, stocks steady, with all eyes now on the Fed.

By | September 18, 2019

The US$ is lower on Tuesday after a mostly choppy and range-bound session ahead of an expected interest rate cut by the Federal Reserve later today, with the Euro leading the way higher, underpinned by strong rebound in German economic sentiment.  The German ZEW Economic Sentiment rose to -22.5 in September, up from -44.1 and beat expectation of -38, although this is still well below long-term average of 21.5. The Current Situation index dropped to -19.9, down from -13.5 and missed expectation of -15.0, while the Eurozone ZEW Economic Sentiment rose to -22.4, up from -43.6, beat expectation of -37.4. Eurozone Current Situation index dropped -1.1 to -15.6.

In other markets, the main move was in oil, with WTI falling sharply, down by 6% after Saudi Arabia’s energy minister said the kingdom has fully restored its oil production following the weekend attack, attributed to Iran.

Stock markets held their ground in the face of Middle East uncertainty, while the metals chopped around but remained pretty much unchanged ahead of today’s Fed meeting.

Wednesday will be all about the FOMC, and until then markets are likely to be pretty much rangebound although the NZ Current Account (exp -$1.5Bio) and the UK CPI (exp 0.5%mm, 1.9%yy) may create some waves for the Kiwi and for Sterling respectively. The Fed seems likely to cut by 25bp, and it would seem that any market reaction will depend on the signals in the dot plot and on Jerome Powell’s outlook. The recent surge in the oil price seems unlikely to play any real part in the Fed decision although Jerome Powell is under pressure from Donald Trump to be more aggressive in easing monetary policy. Don’t forget that flowing on from the FOMC, Thursday will see interest rate decisions from the BOJ, SNB and the BOE.  Have a good day.

Economic data highlights will include:

Wed: NZ Current Account, Japan Merchandise Trade Balance, Australian WBC Leading Index,  UK CPI, PPI, RPI, EU CPI, US Housing Starts, Building Permits, FOMC Meeting/Statement/Press Conference/Projections,

Market moves, in brief:

FX: DXY 98.23 (-0.42%)

Bonds: US10Y; 1.809% (-2.29%), German 10Y; -0.475% (+0.77%), UK 10Y; +0.615% (-0.03%), Australian 10Y; 1.141% (-4.82%), NZ 10Y; 1.28% (-4.61 %), China 10Y; 3.108% (+1.52%)

Stock Indices: DJI; +0.13%, S+P; +0.26%, NASDAQ; +0.4%, EUStoxx50; +0.08%, FTSE100; -0.01%, Shanghai Composite; -1.74%,

Metals: Gold $1500 oz (+0.11%), Silver $18.01 oz (+0.9%), Copper $2.626 lb (-0.5%), Iron Ore $94.03 per tonne (NYMEX) (-0.36%),

Oil: WTI $58.75 pb (-5.00%)

CURRENCIES
EURUSD: 1.1073
Res  1.1095  1.1115  1.1135
Sup  1.1045  1.1020  1.0990
USDJPY: 108.13
Res  108.35  108.50  108.70
Sup  107.90  107.70  107.50
GBPUSD: 1.2499
Res  1.2530  1.2560  1.2600
Sup  1.2460  1.2425  1.2380
USDCHF: 0.9930
Res  0.9945  0.9960  0.9975
Sup  0.9915  0.9900  0.9885
AUDUSD: 0.6866
Res  0.6880  0.6895  0.6910
Sup  0.6850  0.6835  0.6820
NZDUSD: 0.6358
Res  0.6365  0.6380  0.6395
Sup  0.6350  0.6335  0.6320
INDICES / COMMODITIES
S&P.fs: 3005.28
Res  3015.00  3025.00  3035.00
Sup  2995.00  2985.00  2975.00
DJ30.fs: 27113.00
Res  27160.00  27220.00  27315.00
Sup  27050.00  26965.00  26870.00
SPI200.fs: 6701
Res  6705  6720  6735
Sup  6685  6670  6655
XAUUSD: 1501.70
Res  1510.00  1530.00  1520.00
Sup  1490.00  1480.00  1470.00
XAGUSD: 18.00
Res  18.10  18.30  18.45
Sup  17.85  17.70  17.55
WTI.fs: 58.99
Res  60.00  61.00  62.00
Sup  58.45  57.45  56.50