The Federal Open Market Committee (FOMC) minutes of the December 10-11 meeting are due later today (19:00 GMT). The report should reiterate that policy and the economy are in a “good place.” That’s the Fed’s new mantra as it enters 2020, having shifted gears in 2019 to easing from a tightening stance in 2018, and now is on the sidelines monitoring conditions. The Committee voted unanimously 10-0 at last month’s meeting to leave the rate stance unchanged and to indicate that the policy stance is “appropriate.” Hence, the report shouldn’t show much disagreement among the members. Growth looks solid and downside risks have been moderating. However, one aspect of the meeting will be of interest will be the dots where four members penciled in a rate hike in 2020. But, it is understood that, that view did not have a lot of traction. Chair Powell even said don’t dwell on individual estimates (miss the forest for the trees) and has indicated a tightening isn’t in the cards until inflation hits the 2% goal on a sustained basis. While there have been some increasing pressures in some measures, it doesn’t appear the Fed is too worried about prices yet. The Fed, at the moment, is set on a “No Change” 2020 following two years of ups and then downs for interest rates, save the geopolitical backdrop, which deteriorated significantly earlier today.
US ISM manufacturing index fell to 47.2 in December from 48.1 in November. It was at 54.3 a year ago. The employment component dropped to 45.1 versus the prior 46.6. Production fell to 43.2 from 49.1. New orders were weaker at 46.8 from 47.2. New export orders edged lower to 47.3 versus 47.9. Imports were slightly firmer at 48.8 from 48.3. Prices paid climbed to 51.7 from November’s 46.7.
The Dollar fell following the much weaker manufacturing ISM outcome, which saw EURUSD rally from 1.1150 to 1.1165, while USDJPY fell from 108.25 to 108.06 lows. Of all the forex pairs we monitor USDCAD had the most unusual 2019. It traded at its highest point (1.3661) on the first trading day of the year (January 2) and at its lowest point (1.2950) on the final trading day of the year (December 31). Recent highs and lows of 1.3010, and 1.2950 should hold up for now.
Click here to access the Economic Calendar
Head Market Analyst
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.