Published: Thu, August 01, 2019
Finance | By Kristine Clayton

Shares steady as Fed comes into focus; dollar at two-month high

Shares steady as Fed comes into focus; dollar at two-month high

At this point, it looks as if the market is trying to find its footing, but with the Federal Reserve meeting coming, it's hard to imagine a scenario where we can get a lot of strength or weakness as the Federal Reserve statement will decide where we go next.

The British pound touched its lowest against the dollar in over two years after Prime Minister Boris Johnson said a hard divorce from the European Union was in the cards, while stocks dipped globally on Monday after last week hitting their highest in five months.

In the meantime, over in the United Kingdom (UK) the British pound tumbled to a 28-month low against the dollar to below USD $1.23 per British pound when Prime Minister Boris Johnson's government said it now assumed there would be a "No-deal Brexit" because a "stubborn" European Union was refusing to "renegotiate" the divorce agreement that was negotiated between Prime Minister Theresa May and the European Union (EU), but that never made it "through" the UK parliament.

"Besides, addressing cautions over scales and impacts of an interest rate-cut, a senior investment strategist for Allianz Investment Management in Minneapolis, Charlie Ripley said, "(The Fed is) looking ahead and they know there's increased downside risks around trade and supply lines.

The euro was 0.1% lower at $1.111.

At the time of writing the GBP/USD exchange rate has fallen 0.4% so far this morning with the pairing striking a low of $1.2329, its worst levels since March 2017.

While the Federal Open Market Committee (FOMC) is widely expected to vote to cut interest rates following this week's meeting, the continued momentum in the USA economy suggests that there will be little need for further cuts down the road.

Inc and Facebook Inc weighed heaviest on the S&P 500 and the Nasdaq, which both closed lower.

Anyway, about three quarters of market participants still expect a 0.25 percent rate cut on Wednesday.

"Apple's results will be a good read into trade and the situation with China, and if Apple has a good number it would be a stabilizing force for the technology sector", said Craig Hodges, portfolio manager with Hodges Funds in Dallas.

MSCI's gauge of stocks across the globe shed 0.16% and emerging market stocks lost 0.28%.

Futures for the pan-region Euro Stoxx 50 and Germany's DAX were down about 0.2% in early deals, though London's FTSE futures were a shade higher.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.6% in slow trade.

Investors were also keeping an eye on U.S.

US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer will meet with Chinese vice-premier Liu He for talks in Shanghai starting on Tuesday, their first face-to-face meeting since US President Donald Trump and Chinese President Xi Jinping agreed to revive talks late last month.

Oil futures meandered throughout the session but ended decidedly in the black as Fed easing expectations more than offset the reaction to "constructive" Iran talks over the weekend.

The pound last traded at US$1.2379, having slipped to US$1.2375 in early trade. "The question is what they are going to say about future cuts".

Crude oil prices added to the previous day's gains, when stronger-than-expected U.S. GDP strengthened the outlook for oil consumption by the world's largest economy.

The GDP chain price index rose at a 2.4 percent annual rate (1.8 percent y/y), which was the quickest growth rate in four quarters.

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