The most important event of the week was from the United States where the Federal Reserve did not touch interest rates in its September meeting.
The cost of money remained at 1,25%, confirming the expectations of analysts who did not anticipate any change in US rates.
Before the announcement, the dollar went down, allowing the euro/dollar exchange to reach the threshold of 1,20. Immediately after the announcement, the greenback immediately appreciated against most of the currencies. EUR / USD actually collapsed quite clearly below the threshold of 1,19.
The dollar also appreciated against the yen given the decision of the Japanese central bank to keep the negative rates.
Also the gold price was affected by Federal Reserve’s decisions, which from the uppermost intraday of $1.315 per ounce collapsed within a few seconds below the $1.300 threshold.
As far as for the stock market, the main Wall Street indices almost ignored Janet Yellen’s conference.
The consequences were mainly on Asian stock markets: Nikkei marked a rise of 0,20%, while Hang Seng and KOSPI were down respectively of 0,16% and 0,13%.
During Janet Yellen press conference, which followed the announcement, the main subject was not the interest rates but the bank’s financial statement normalization that will start in October.
The reduction will start at $10 billion per month this fall. In other words, until next December the Fed will reinvest in Treasuries the repayments generated by the current portfolio excluding 6 billion. Over the same period, investment in mortgage-backed securities will have a limit of 4 billion. These limits will progressively increase to 30 and 20 billion from October 2018 onwards.
Another weekly event worth of note is to be observed in the price of oil. Oil prices are going through a rally that makes them travel at a range of $50-55. It has managed to recover part of the losses suffered in recent months not only thanks to OPEC’s efforts to reduce crude oil production and its exports, but also to the demand forecasts and the resulting rebalancing of the market.
The impact of hurricanes reduced and refineries are returning to operation. The combination of all these elements is pushing some analysts to foresee a WTI at $55 in the short run. Not everyone, however, is so optimistic.
The market movers of the week from the 25th to the 29th of September will make the Economic Calendar rich of ideas on which to trade.
There will be a lot of macroeconomic data coming from the Eurozone and the United States, but no major event from the point of view of monetary policy.
Market focus will be mainly on inflation in the Eurozone in an attempt to observe that we are still far from the 2% target of the European Central Bank.
Among the most important market movers of the week, we also mention United States Gross Domestic Product data that, along with data from the Eurozone, will be able to provide new insights into the euro dollar exchange rate.
Lastly, to be monitored there will be also periodic data on the stock of oil, especially in the light of recent oil gains.