(18 FEBRUARY 2019)DAILY MARKET BRIEF 2:Fed watching

(18 FEBRUARY 2019)DAILY MARKET BRIEF 2:Fed watching

18 February 2019, 12:57
Jiming Huang

This Wednesday should bring news of the US Federal Reserve’s normalization strategy. The Fed’s January meeting dropped its tightening bias. Yet with interest rates on hold for now, investors will watch balance sheet management. Chairman Jerome Powell suggested the bank was near to settling a strategy for balance sheet roll-off. January meeting minutes could time the release of an updated Policy Nominalization Principle and Plans (PNPP): this would confirm the Fed is in a sustained holding pattern. Headwinds around GBP and EUR in Brexit fears and soft economic data mean that gains against the greenback are unlikely at this point. Play the range 1.1200-1.1500 in EUR/USD. 

Today’s US holiday will keep trading subdued. The news flow remains dominated by old stories that refuse to move out of the way: trade tensions, Brexit and US political chaos. Perhaps this is why we are seeing buyers stepping back into Bitcoin. Or perhaps it is the surprise issuance of the JPM Coin. Additional Fed dovishness should also support cryptos.

By Peter Rosenstreich

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