- It has been a rather slow start to a potentially eventful week, though the incoming positive trade-related headlines remained supportive of a generally risk-on mood and weighed on traditional safe-haven assets. The US Trade Representative’s office said on Friday that the US and China have made progress in trade talks and have come close to finalizing parts of a “phase one” trade deal. The US officials have said they hope to sign a deal in mid-November.
- Fading safe-haven demand was further reinforced by some follow-through pickup in the US Treasury bond yields, which helped the US Dollar to preserve last week’s modest gains. However, the USD upside is likely to remain limited as traders awaited the outcome of the FOMC meeting. The Fed is scheduled to announce its decision on Wednesday and is widely expected to cut interest rates for the third time this year.
- The Fed rate decision will be announced just hours after a report on the US third-quarter GDP, which is expected to show that a further deceleration in growth during the three months to September.
- Apart from this, the Bank of Japan is also scheduled to announce its latest monetary policy update on Thursday and is expected to keep policy on hold, though the decision is said to be a close call and could infuse some volatility across the JPY crosses.
- The British Pound remained on the defensive on the back of growing risk of a snap UK election, especially after Prime Minister Boris Johnson failed to win approval for his Brexit timetable. Market participants look forward to a decision over Brexit delay request to January 31, expected later this Monday.
- Cryptocurrency markets started the week with strong gains across the board in the wake of a statement from the People’s Bank of China (PBOC), saying that commercial banks should step up blockchain applications. The comments came three days after Xi said that China should accelerate the adoption of blockchain technology.
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