Market Snapshot – Pound Falls, Markets Await Fed Meeting and Dutch Elections

Pound Falls to Eight Week Low as UK Parliament Passes Brexit Bill

Cable dropped to a fresh eight-week low following the House of Commons rejection of a proposed amendment to the Brexit bill that would have forced the government to seek parliamentary approval if the UK is forced to leave the EU without a new trade deal. The rejection means that the government is now free to proceed and invoke Article 50, as well as exit the EU on WTO terms.

The pound is trading at 1.2132 versus the US Dollar, down 0.70%, touching a lowest point of 1.2109.

Markets Await Federal Reserve 2-day Meeting

The markets will focus on the FOMC on Wednesday which is widely expected to hike rates another 25 basis points to a 0.75% to 1.00%. This would be the third tightening of the cycle and recent Fed speak suggests the normalization process could be undertaken in earnest later this year.

Key for the immediate outlook, however, will be the dot plot, and whether the Fed sticks with the 3-hike scenario from December, or upgrades it to 4 tightening in 2017 and beyond.

European stock markets are mixed and mostly lower. The US Dollar firms versus other currencies as markets anticipate a rate hike tomorrow. US Dollar index trades at 101.51, +0.25%.

Dutch Elections in Focus

Over in the Netherlands, it’s the day before Election Day, the latest scuffle with Turkey having provided Wilders with a likely boost, though he will need to be able to form a coalition, not just win a majority and doubts remain over which parties will be willing to join forces.

The financial markets react positively to the latest political events, despite the approach of the NL elections, NL 2 Years bond negative yields showing a strong trust in the government by that time. In addition, the AEX index has seen a strong bullishness in the last days despite the consolidation occurring currently in the rest of Europe and US indices.

Markets will be closely watching the outcome of the Dutch elections as concerns over Europe stability continue to weigh on global economy.

The EUR/USD is trading steady at 1.0631.

Oil Prices Drop on Saudi Production Hike

Crude Oil futures are under pressure on Tuesday after the release of a monthly report from OPEC. The report was perceived as bearish because it showed that Saudi Arabia told the cartel that it raised output back above 10 million barrels a day in February, reversing about a third of the cuts it made in January.

According to the data, Saudi Arabia boosted production by 263,300 barrels a day to 10.011 million a day. OPEC had estimated about 9.8 million barrels per day. In January, the kingdom had curbed supplies more than it needed to comply with the cartel’s plan to curb production.

Crude oil is trading at $47.74, 1.38% down, Brent oil is trading at $50.77 -1.13%.