FOMC and Crude Oil

The US dollar went higher after Trump administration reopens talks with China, rose on Tuesday after American inflation data was in line with expectations and consumer confidence came out higher than forecasted. The U.S. Federal Reserve wraps up its two day Federal Open Market Committee (FOMC) meeting today at 18:00 pm GMT. The market is not anticipating a major change from the language on the rate statement or the interest rate itself. The September Fed meeting has been priced in for another rate hike as the Fed continues its path toward monetary policy normalization.

The U.S. Federal Reserve is not expected to modify its monetary policy today and without a press conference the focus will be on the language changes in the statement. The Fed has already hiked twice in 2018 and policy members have talked about two more interest rates lift if the economy continues on its current growth path. President Trump has already commented that he is not a fan of the Fed’s decision to keep driving interest rates higher. Chair Powell has so far avoided commenting outside of the central bank’s mandate and this week there won’t be a chance for the financial press to seek his opinion on the matter of the Fed’s independence.

In currencies, the EUR/USD pair once again failed to make it through a 2-1/2-month-old descending trend-line resistance and retreated sharply from over one-week high on Tuesday. The GBP/USD pair is back on the soft side for this week, trading back into the 1.3100 major level after peaking near 1.3175.

In commodities, Gold may face further pressure due to the metals’ inverse correlation with the recently stronger U.S. dollar. Regarding Oil, US stockpiles of crude oil are once again sending oil prices in another direction, with the American Petroleum Institute (API) showing that US reserves of crude oil barrels once again rose by 5.6 million barrels in just a week, wiping out previous contractions in supply stocks and pushing oil prices back into recent lows, with prices back into 68.40.

For today important economic releases are Manufacturing PMI, ADP Non-Farm Employment Change, ISM Manufacturing PMI, Crude Oil Inventories, FOMC Statement and Federal Funds Rate.