U.S. indices ended in the green on Tuesday ahead of the Federal Reserve monetary policy meeting. Market expectations for a 25 basis-point rate cut were at 47.3% and no change at 52.7% according to the CME Group’s FedWatch tool. The SPX was lifted by shares in the Real Estate (+1.4%), Consumer Services (+1.06%) and Household & Personal Products (+1.02%) sectors while the Energy sector (-1.52%) was under pressure. The S&P 500 (3,005.70) trades above its 20d moving average (2,942.98 – positive slope) and its 50d moving average (2,950.75 – flat slope). WTI Crude for October delivery fell over 5% to a low of $58.50 on Tuesday before rebounding slightly after a Saudi Arabian source told Reuters production could be fully back on line within weeks.
On the economic data front, industrial production rose 0.6% MoM in August (vs. +0.2% estimated). On Wednesday we expect August housing starts increase to 1.25M from to 1.19M in July.
European markets are expected to open on a flat note.
Foreign Exchange
The US dollar was bearish against all of its major pairs on Tuesday. On the economic data front, US MoM Industrial Production increased 0.6% in August beating the estimate of 0.2% compared to a revised decrease of 0.1% in July. On Wednesday we expect the US MBA Mortgage Index weekly reading. Also US Housing Starts is anticipated to increase to 1250K for August compared to 1191K in July.
The Euro was bullish against all of its major pairs. In Europe, September German ZEW survey assessment of the current situation fell to its lowest level since June 2010, extending its decline into negative area at -19.9 versus -15 expected and -13.5 in August. However, ZEW survey Expectation of Economic Growth slightly improved from its lowest level since 2011 at -22.5 versus -38 expected and -44.1 in August.
The Australian dollar was bearish against most of its major pairs with the exception of the CAD and CHF.
Commodities
After the close of Wall Street, WTI Crude Future (OCT 19) was down $3.8 to $59.07. The contract was above its 20D MA (@ $56.17) and above its 50D MA (@ $56.23).
Gold was up $3.4 to $1501.8. The precious metal was below its 20D MA (@ $1515) and above its 50D MA (@ $1479).
Copper Future (DEC 19) on Comex was down 1.3c to 262.8c/lb. The contract was above its 20D MA (@ 259.77c) and below its 50D MA (@ 263.54c). In Europe, the London Metal Exchange reported its copper inventories decreased 2600 tons to 299325 tons.