Wednesday September 18th, 2019

Currency markets remain relatively stable ahead of the FOMC rate decision today. The Fed is expected to cut rate by 0.25% and the Fed chairs comments will be watched closely. Oil prices eased after the Saudi oil ministers comments that supply demands will be met. Geopolitical risk remains high with Saudi officials promising « material proof » linking Iran to the oil attack. FOMC & Saudi defense ministers comments will closely watched and will likely impact currency volatility today.

C$ remains within its current range despite yesterdays weak manufacturing data and oil prices falling 6% as Saudi’s announced sufficient stockpiles to meet current demand. A busy day for data with Canadian CPI, Saudi defense minsters speech and FOMC rate decision. Expect C$ to fluctuate today as geopolitical risk/oil and falling US interest rates will impact the loonie.

European monthly CPI data came in below expectations, but EUR remains within its narrow range ahead of the Fed decision. ECB Vice President Luis de Guindos made several comments today « As long as inflation in Eurozone does not converge to our inflation target interest rates won’t rise ».  « Hard Brexit would increase volatility and have a negative impact on global economy ». « Hard Brexit is not fully priced in by markets ».

UK CPI missed with 1.7% in August, falling to its lowest levels since 2016. UK PM hasn’t made any progress on Brexit negotiations according to Chief EU negotiator. Concerned comments from ECB on Brexit, weak data and limited progress with EU Negotiators could impact GBP’s recent strength.