By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

Wall Street ended on a Fed note. A risk-off sentiment was already present in the Asian trade as investors are gearing up for the high-stake meeting between President Trump and Xi and the G20 summit. The markets also digested the series of disappointing data- Housing Price Index, New Home Sales and the Fed Manufacturing Index, which dampened sentiment.

However, investors’ sentiment soured further after the Fed’s speeches. Jerome Powell reiterated the same message as last week’s FOMC press conference. The President of the Federal Reserve, Dr Bullard was the one in the spotlight:

“An “insurance cut” of 25 basis points to interest rates would be enough to protect against a sharper-than-expected slowdown in economic growth,” “I think 50 basis points would be overdone,’’

Investors react to the probability of one rate cut rather than a series of rate cuts. A less dovish statement sent the stock markets in the red. Major US equity benchmarks closed in negative territory with modest losses:

• The Dow Jones Industrial Average ended 0.7% lower while S&P500 fell by 0.1%.
• The Nasdaq Composite dropped by 1.51%.

Source: Bloomberg Terminal

Currency Markets

In the forex markets, major currencies were mixed against the greenback. Weaker economic data were oscillating demand for the US dollar, but a lesser-than dovish Fed’s statement helped to cushion the downward pressure on the greenback.

Source: Bloomberg Terminal

The British Pound was unable to hold the recent gains as political drama persists in the United Kingdom. The focus is on the leadership race- the favourite candidate Boris Johnson reiterated that Britain would leave the EU on the 31^st of October with or without a deal. On the other side, Jeremy Hunt believes that Boris could trip them into a general election before they delivered Brexit.

However, at the moment, the parliament vote to take a full summer recess in the middle of a national crisis is not boding well with the people.

GBPUSD dropped back to the 1.26 level.

Commodities

A larger-than-expected draw of crude oil inventories from -0.812M to -7.55M prompted a rally in the oil market.

WTI and Brent Crude Oil is trading in the vicinity of $58 and $65 respectively.

UKOUSD and USOUSD (Hourly Chart)

Source: GO MT4

Gold jumped to an intraday high of $1,439 before paring some of the gains as investors lighten their negative outlook on the USD based on the latest Fed speeches. A lesser dovish statement has put some downward pressure on the dollar-commodity commodity.

As of writing, XAUUSD is currently trading at $1,420.

XAUUSD (Daily Chart)

Source: Bloomberg Terminal

Cryptocurrencies

The recent rally of the crypto-market is currently finding support from Facebook’s Libra. Despite having the potential of being a threat to other cryptos, Libra is viewed as the gateway to the mass adoption of cryptocurrencies, which is, therefore, a net positive for the crypto-market. Bitcoin is firmer at $11,660.

BTCUSD (2-Day Chart)

Source: GO MT4

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