RECAP

During the Asian Session, the Japanese Index, the Nikkei 225 closed at its highest level since 1996, as the American indices trail in the futures department and point to a lower opening.

European stocks are little changed, with Spanish shares gaining after Catalan President rows back from an immediate declaration of independence. MSCI’s all-world stocks index briefly hit a fresh record high in opening European trading as a 1.5% jump in Spain’s IBEX.

In early trading, the euro rose affected by the lack of decision from the Catalan government while the dollar pulled back as investors awaited news from the FOMC meeting minutes later on today. the euro could not hold on to gains as the renewed fears over the Catalan independence spooked investors.

In the US, President Donald Trump’s public feud with Tennessee Senator Bob Corker, an influential fellow Republican, has raised concern that his push for a tax-code overhaul could be harmed. At the same time, the Federal Reserve will publish the minutes from its last-minute later with a third U.S. rate hike of the year now looking nailed on for December.

Overnight, Trump tweeted dismisses rumors that Chief of Staff Kelly will be fired soon, in which he blames dishonest media and says the chief is doing a fantastic job. Elsewhere, Fed’s Kaplan (voter, soft hawk) said will be assessing the progress of US economy towards full employment and looking for more signs of upward inflation. Kaplan added that he is mindful waiting too long to raise rates could leave the Fed behind the curve and increases chances of a recession, but also commented that the Fed can afford to be patient on rate hikes because economic growth is not running away.

In geopolitics, North Korea is reportedly looking as if it could be ready to launch multiple scud missiles. US President Trump was briefed by Defense Secretary Mattis and a top military leader, in which they discussed a range of options to respond to any North Korea aggression. There were reports that 6 planes including 2 US B1-B bombers flew over the Korean peninsula as a show of force.

In commodities, trade has also been quiet throughout the session with WTI crude futures mildly extending on yesterday’s 3% increase to briefly break above the USD 51/bbl level. Of note, today will see the release of the API crude report after US close. Gold climbed 0.1% to $1,288.98 an ounce, the highest in more than two weeks.

OUTLOOK

Looking at the day ahead, China’s Xi Jinping is due to deliver a communique following the meeting of the Chinese Communist Party. The UK’s Philip Hammond will face questions in the House of Commons, including on Brexit related issues. In the US, the big focus in the US will be the FOMC meeting minutes from the September meeting. Data wise we’ll receive August JOLTS data prior to this, while the Fed’s Evans and Williams are both due to speak later on. The ECB’s Praet is also due to deliver comments this evening.

TRADERS VIEW

The dollar was little changed against its peers before FOMC minutes; stock futures held to tight ranges after Tuesday’s record high, while Treasury yields slipped. The euro held above 1.18 as options suggested further upside, while Spanish bonds outperformed on lower Catalan risks and the Turkish lira climbed for the first time in nine days.

The FOMC is expected to show some dovish signals if the committee shows signs of concerns over the impact of the Hurricanes on the Economy, if there are such concerns, the dollar is expected to fail and drop against its major peers. Moreover, any talk of inflation will be taken out of context as the figure is yet to be released.

GBPUSD – The momentum on the pair seems to be fading as the price movement has become somewhat erratic as of late. The whole Brexit ordeal that Britain is facing is forcing investors to flee the Sterling Pound.

USDJPY – The upward momentum on the pair is waning as the MACD starts to dip lower along with the RSI which has finally broken down below the 60-level. The 111.80 level is the next level of support on the pair.

EURUSD – Posting the 4th straight day of gains, the pair seems to continue on the upside for the day. The pair is testing the 55-DMA at 1.1840 as the zone between the 55- and 25-DMA is considered to be an important resistive zone.

AUDUSD – The 0.7715 remains to be an important target for the pair as downward momentum according to the MACD continues to evolve. It is only if the pair can break above the 0.7800, the pair will see more upward movement.

USDCAD – The pair is still very much weakening as the price of oil still plays an important part of the pair’s dynamic, moreover, MACD is starting to dip indicating either that the correction has ended or that consolidation is at hand.

Dow Jones – The futures index keep rising upwards as it reached an all-time of high of 22806 and seems to continue to rise ahead of the FOMC Meeting Minutes.