CURRENCY MARKET WRAP 

As of Thu, Jun 20th, Singapore Time zone UTC+8

Dollar Index -0.48%, 97.18
USDJPY, -0.36%, $108.13
EURUSD, +0.34%, $1.1236
GBPUSD, +0.70%, $1.2655
USDCAD, -0.77%, $1.3271
AUDUSD, +0.13%, $0.6886
NZDUSD, +0.30%, $0.6554

The FOMC’s policy directive came in largely as expected. The fed funds rate was unchanged, the word “patient” was removed, and the directive noted that the Fed will act as appropriate to sustain the economic expansion amid increased uncertainties to the outlook. St. Louis Fed President James Bullard was the lone dissenter among voting members, preferring to lower the fed funds rate by 25 basis points.The Fed’s updated dot plot showed a divided stance in policy for the remainder of the year. Eight voting members indicated they were in favor of a rate cut in 2019, while eight preferred to keep rates unchanged. One member forecast a rate hike. Nevertheless, the fed funds futures market now sees a 100% implied likelihood of a rate cut in July.

Dollar fell across the board after the FOMC statement and dot plot forecast was released but failed to extend lower on the back of Powell’s comments because the Fed Chair downplayed their urgency to ease. The Fed may be waiting for more data before lowering interest rates but it won’t take much to push them into action.

U.S. Treasury yields fell sharply after the release of the directive and took a leg lower during Fed Chair Powell’s follow-up press conference. The fed funds-sensitive 2-yr yield dropped nine basis points to 1.75% after touching 1.90% at its high. The benchmark 10-yr yield declined three basis points to 2.03% after touching 2.10% at its high. The U.S. Dollar Index declined 0.48% to 97.18. WTI crude declined 0.3% to $53.99/bbl.

STOCK MARKET WRAP 

S&P500, +0.30%, 2,926.46
Nasdaq, +0.42%, 7,667.74
Nikkei Futures, +2.20%, 21,370.0

Stock market finished with modest gains on Wednesday after the Fed kept rates unchanged and indicated it was more open to lower rates in upcoming meetings. The 0.3% gain in the S&P 500 left the benchmark index less than 1.0% from its record close. The major averages barely budged from their flat lines prior to the rate decision and wavered with modest gains afterwards. Most S&P 500 sectors finished higher, led by the defensive-oriented health care (+1.0%), utilities (+0.8%), and real estate (+0.7%) sectors. The materials (-0.5%), energy (-0.2%), and financials (-0.2%) sectors underperformed.

In corporate news, Adobe Systems (ADBE 291.21, +14.43, +5.2%) reported upbeat earnings results, helping investors overlook its downside Q3 guidance. U.S. Steel (X 15.17, +0.59, +4.1%) lowered its Q2 EPS guidance due to softening end market demand, but shares pushed higher as investors presumably viewed the news as already being priced in.