The Federal Reserve left the benchmark interest rates unchanged on Wednesday, stating that economic activity in the US has picked up.
- After a two-day meeting, the Fed held the rates at a range of zero to 0.25% pledging to keep rates exceptionally low for an extended period to support a fragile recovery. The US economy shrank at an annual rate of 1% in the second quarter. However, some analysts expect the US economy to grow by 3% in the third quarter, given the massive stimulus injected into the market. Still, many await signals about the exit plan from the Fed's quantitative easing and agency debt buying program.
- Crude oil plummeted almost 4% into the $68 a barrel after US government data showed a big jump in crude and products stockpiles. The Energy Administration reported a rise of 2.8 million barrels in the week to September 18, against expectations of a drop of 1.5 million barrels.
- US stocks rose after optimistic comments from the Fed on the economy, following a sharp downturn as investors fretted about the timing of the removal of some of the Fed's stimulus. An initial assessment also suggests profit taking and the question about whether stocks had become too expensive. However, the Fed said the US central bank would slow purchases of mortgage debt to extend the program's life until the end of March.
Currency to watch out for: EURUSD & GBPUSD
- The EURUSD pivot point is at 1.4785 with a preference to enter into short positions at 1.4775
- The GBPUSD pivot point is at 1.6395 with a preference to enter into short positions at 1.6385
Today's calendar and market movers:
- German Ifo Business Climate expected to rise to 92.0
- US Unemployment Claims expected to rise to 550,000
- US Existing Home Sales expected to rise to 5.35 million
- The Group of Twenty is due to meet today about a range of global economic issues
- US stocks closed lower on Wednesday with the Dow off 0.8%, the S&P off 1% and the NASDAQ off 0.7%
- As of 06:15 GMT the Nikkei is trading at 1.67% and the Hang Seng at -2.75%