The US FOMC Takes the Centre Stage, India-U.S. Trade Teams Agree to Fast-Track Bilateral Agreement Negotiations

Wall Street’s three major indexes closed lower Tuesday amid choppy trading as investors exercised caution before the Federal Reserve’s anticipated interest rate decision.

Markets are pricing in a 25-basis-point cut at the conclusion of the two-day Federal Open Market Committee (FOMC) meeting on Wednesday, responding to labour market deterioration shown in recent economic data.

While a 25 basis-point cut appears certain, markets will scrutinise the accompanying statement and officials’ economic projections for guidance on the rate outlook.

Traders anticipate an additional 25 basis-point reduction at the Fed’s October and December meetings, though Chair Jerome Powell will likely emphasise that future cuts depend on incoming economic data.

U.S. equities declined modestly after the S&P 500 and Nasdaq reached fresh record highs, with both indexes retreating 0.13% and 0.08% respectively, from Monday’s peaks. The pullback reflects profit-taking and pre-decision uncertainty.

Currency markets saw significant movement as the dollar index fell to its lowest level since July 1. The euro surged nearly 1% to a four-year high of $1.1877, extending its 2024 gains to almost 15% and positioning for its largest annual rise since 2003. The Swiss franc led G10 currencies against the dollar with a 1% gain.

Technology shares showed strength, with the Philadelphia semiconductor index hitting new highs and extending its winning streak to nine sessions—the longest run since 2017. Oracle gained 1.5% following reports that it’s part of an investor consortium in a U.S.-China deal to keep TikTok operating domestically.

Economic data provided mixed signals. August retail sales exceeded expectations with a 0.6% increase, demonstrating consumer resilience despite labour market softening.

A U.S. Trade Representative delegation led by Chief Negotiator Brendan Lynch met with Indian Commerce Department officials on September 16, 2025, to advance discussions on the India-U.S. Bilateral Trade Agreement. The talks were described as positive and forward-looking, with both sides agreeing to intensify efforts toward early conclusion of a mutually beneficial trade deal.

Nifty resumed its upward rally by gaining 169 points to close at 25239 yesterday. The market started the session on a flat note but steadily gathered momentum and closed near the day’s high.

The technical trend remains strong, as the Nifty is positioned above its key near-term averages. The immediate support for the Nifty has now shifted up to the 25,000 level, while on the upside, the 25,420- 25,500 band could offer resistance.

Indian markets are expected to open modestly higher, buoyed by tonight’s anticipated FOMC rate cut and improving prospects for the India-U.S. Bilateral Trade Agreement negotiations.

Source: HDFC Securities Prime Daily, 17 Sept 2025

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