FOMC results, what to expect from the Bank of England & ADP

2 Mei 2019

The announcement of the Federal Open Market Committee (FOMC) Fed meeting results was the main event. As we expected parameters of monetary policy were left unchanged. As for the comments, the Fed has been extremely positive about what is happening in the US economy recently. At the same time, the Central Bank noted weak inflation indicators, which were perceived by the markets as a “pigeon” position. Recall that the Fed simply does not have any reason to raise the rate with weak inflation. And that means that the pause in the rate increase will be delayed or the rate might be lowered, to intensify the inflation processes in the country. Nevertheless, the lack of any mention of the fall on the part of the Fed possibility perceived the markets as a signal for buying the dollar, which, by the end of the day, somehow compensated previous losses. Our position is still unchanged - we continue to look for the dollar selling points today.

About the dollar news. Publication of statistics on US employment from ADP was another important news. The data came out surprisingly good: + 275K jobs (forecast was + 180K). Recall that this Friday we are waiting for official statistics on the US labor market. If the figures for the NFP are somewhere in this area, it can greatly help the dollar, which is experiencing serious problems this week. But in more details, we will talk about this tomorrow.

The meeting of the Bank of England is on focus today. To begin with, as in the case of the Fed, we do not expect any changes in the Great Britain monetary policy parameters. In addition to the factors that put pressure on both the Fed and the Bank of England (the threat of a slowdown in global economic growth and a possible transition to the recession stage), the Central Bank of England has one more even greater problem - Brexit. While there is no clarity on this issue, the risks of the chaotic exit of Britain from the EU are great, and this promises a very serious level of uncertainty and potential damage to the economy. To loosen the boat in such conditions, the Central Bank simply has no right. So today we do not expect surprises from the Bank of England. As for buying the pound, after the strong growth in the last couple of days, the results of the Bank of England meeting may well be perceived as a reason for the local correction. So today we are more likely to sell pounds than to buy it.

According to the Ministry of Energy report, oil production in the United States increased by 100 thousand to 12.3 million barrels per day, which is a new absolute record. At the same time, oil reserves in the US unexpectedly rose sharply (by +9.93 million, with a forecast +1.47 million). These are pretty strong bearish signals. So today we will look for points for oil sales.

Our positions for today are as follows: we will continue to look for points for selling the dollar against the euro, as well as the Australian and Canadian dollars. In addition, we will buy gold, as well as sell oil and the Russian ruble on the intraday basis.