Fundamental News
Today’s highlights:
• MPC Meeting Minutes (GB; 09:30 GMT)
• Building Permits + Housing Starts (U.S; 13:30 GMT)
• BoC Gov Poloz Speaks (Can; 15:40 GMT)
• FOMC Statement + Interest Rate Decision (U.S; 19:00 GMT)
• Fed Chairman Bernanke Speaks (U.S; 19:30 GMT)
Federal Reserve policy makers, while considering today whether to taper $85 billion in monthly bond buying, confront a drop in demand for home loans that argues against a cut to their mortgage bond purchases. A surge in mortgage rates to two-year highs has undercut borrowing, pushing down refinancing by more than 70 percent since last September. Wells Fargo & Co. said this month originations may fall 29 percent this quarter, while JPMorgan Chase & Co. said volumes may plunge 40 percent in the second half compared with the first six months of the year.
Japanese gold retailers are preparing for an acceleration in consumer purchases in the next six months if a planned sales-tax increase is carried out as part of the government’s policy to end deflation. Prime Minister Shinzo Abe will decide whether he will go ahead with a plan to raise the tax to 8 percent in April from 5 percent after analyzing business confidence data from the Bank of Japan on Oct. 1.
Chancellor Angela Merkel said that Germany’s election in four days will be a referendum on the euro’s future stability, as she appealed to voters to reward her handling of the debt crisis with a third term. Merkel, speaking at a rally of her Christian Democratic Union party in the eastern city of Magdeburg, cast the national vote on Sept. 22 as a decision between her policy of conditional bailouts for weaker euro countries and what she portrayed as plans by Germany’s opposition to pool the currency bloc’s debt.
EUR/USD: The EUR/USD was trading flat at 1.33611 at the time of writing ahead of the key data and news in the U.S later in later. The U.S will release the Building Permits, which is expected to increase to 0.950M compared to the previous reading of 0.954M and the Housing Starts, which is also forecast to improve to 0.917M compared to the 0.896M registered previously. The country will also publish the FOMC Statement, the interest rate decision and the Fed Chairman Bernanke Speech. The Federal Reserve concludes a two-day meeting today when policy makers will decide whether to slow its $85 billion of monthly asset purchases. The Federal Open Market Committee will reduce Treasury purchases to $40 billion, while continuing to buy $40 billion of mortgage backed securities, according to the median estimates of economists surveyed by Bloomberg News. Investors should wait for data and news from the U.S to get visibility. Volatility is expected on the American trading session. Investors should at the same time keep an eye on the latest developments in the case of Syria to get additional visibility. The resistance level is at 1.34279 and the support level is at 1.33021.
GBP/USD: The GBP/USD was also trading flat at 1.59097 at the time of writing as investors jumped on the sidelines ahead of the MPC Meeting Minutes in the UK. The Monetary Policy Meeting Minutes are a detailed record of the Bank of England’s policy setting meeting, containing in-depth insights into the economic conditions that influenced the decision on where to set interest rates. The breakdown of the MPC members’ interest rate votes tends to be the most important part of the minutes. Bank of England Governor Mark Carney said in August that policy makers plan to hold the benchmark interest rate at a record-low 0.5 percent until unemployment falls to a pre-set threshold of 7 percent. Lower borrowing costs tend to lead to a weaker currency. Investors should wait for the news and data in UK to come on market to get indications on the trend of the pair on the European trading session. Later in the day, the U.S will release the Building Permits, which is expected to increase to 0.950M compared to the previous reading of 0.954M and the Housing Starts, which is also forecast to improve to 0.917M compared to the 0.896M registered previously. The country will also publish the FOMC Statement, the interest rate decision and the Fed Chairman Bernanke Speech. The Federal Reserve concludes a two-day meeting today when policy makers will decide whether to slow its $85 billion of monthly asset purchases. The Federal Open Market Committee will reduce Treasury purchases to $40 billion, while continuing to buy $40 billion of mortgage backed securities, according to the median estimates of economists surveyed by Bloomberg News. Huge volatility is expected on the pair today. Investors should wait for data and news to come on market before taking position on the pair. Investors should also keep an eye on the latest developments in Syria to get additional visibility. The resistance level is at 1.59607 and the support level is at 1.58521.
