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FOMC Meeting Comes Into Focus, Basic Resources Leads, Concrete Progress On Trade

Thomas Hughes
Another FOMC meeting comes into focus while traders wait anxiously for news on U.S./China trade talks.

The U.S. Markets Brace For FOMC Meeting

U.S. futures were flat and mixed in early Monday trading as the market braces for an FOMC meeting. The FOMC begins a two-day meeting on Tuesday and is expected to release their policy statement on Wednesday afternoon. The U.S. central bank is not expected to alter policy, the committee members are expected to lower their dot-plot forecasts.

The new FOMC dot-plot forecasts are expected to indicate no further policy tightening in 2019. This is likely going to weaken the dollar. The meeting also comes with a press conference with Fed Chief Jerome Powell so there is a chance for increased volatility in the currency markets that afternoon.

In trade news, hope continues to percolate through the market as new evidence suggests U.S. and Chinese negotiators are closing in on a deal. The latest reports from the South China Morning Post and Xinhua News Agency say further and concrete progress has been made.

The National Association of Home Builders sentiment index is due out at 10 AM.

EU Markets Mixed As Brexit And Trade Fears Simmer

EU equity markets were mixed in early Monday trading. Simmering concern for international trade relations was stoked by new EU trade data. The data shows the EU trade surplus with the U.S. and trade deficit with China both increased more than expected. The data put the bloc in an uncomfortable position between the two larger nations as it shows further skewing of trade dollars.

The German DAX was down about -0.30% in early trading despite confirmation the nation’s two largest banks were in merger talks. Shares of Deutsche Bank and Commerzbank both advanced more than 3.0% on the news. The UK FTSE led with a gain near 0.60% while the French CAC was hovering near break-even. Basic resources were among today’s leaders and up an average of 1.5%. Shares of Rio Tinto and Anglo American were both up 2.0% at midday.

Asia Moves Up On Trade News

Asian markets, led by mainland China, were strongly higher on Monday following the trade news. The word that concrete progress had been made alleviated fears sparked when the Trump/Xi meeting was pushed back to April. The news China wanted a deal in place before the Trump/Xi meeting raised concern the two sides had reached an impasse.

The Shanghai Composite was up near 2.5% in Monday trading with the Shenzen component up a slightly stronger 3.0%. The Hong Kong Hang Seng was also moving higher on trade news but a more tepid 1.0%. In Japan, the Nikkei advanced a little more than 0.60%. Shares of Fast Retailing, Softbank, and Fanuc were all up at the end of the session. The Australian ASX was up 0.25% while the Korean Kospi closed with a gain near 0.15%.

This article was originally posted on FX Empire