Forex Market News
Overnight, in the wee hours of tomorrow morning we get the quarterly FOMC projections and statement plus Aunty Janet gets to chat to us.
With inflation rising stronger than expected last night it seems the market is taking this as a sign that the Fed will hasten the tapering of QE3. I doubt that, they would have made their mind up before last night’s data. However, it does point to a strengthening US economy and that is a good sign. I think the money market managers are smarter than what economists are, and smarter certainly than journalists, but this was an interesting read from the view of what the Fed may be doing with their balance sheet. Click Here for more info:
The FOMC is the biggest news announcement on the economic calendar and therefore today will very tight trading until the market digests Yellen’s words. Apart from that we are keeping a close eye on Obama and his reaction to both developments in the Ukraine and Iraq. The US dogs of war are starting to growl and headlines are getting more prevalence on US intervention of sorts in both regions. This would be a catastrophe for all involved except the arms manufacturing.
Also saw this article and I do agree with Twiggy, where is the bad guy?? Even if he is saying it to further his financial interests, we are more and more reliant on China and that is only going to increase. I do not think we have to go so far as Fraser puts it but a healthy balance, highwire act is called for. Click Here for more info:
DATA HIGHLIGHTS TODAY – Japan BOJ Minutes and Trade Balance. UK MPC votes. Canadian Wholesale sales. FOMC FOMC FOMC.
AUDUSD – Looks to be range bound but could also be completing a new cycle, the first in re-engaging in an uptrend that will test 98. Will see how it behaves on support levels near 92.
EURUSD – 1.35 still holding for now as it works off the selling pressure. Still I am on the fence at the moment as would prefer to be a seller but not from here.
GBPUSD – Resistance too much right now even with Carney still in the news targeting the overheated UK housing market. A little swing up and retest of this followed by selling would see the move back to the ema commence.
NZDUSD – Similar to the Aussie, a little range bound. Despite raising rates 3 times (why is beyond me still) the Kiwi is really only 150pips or 1.7% higher, it should be a lot higher, so that tells me there is little interest in owning the currency. And that to me makes much more sense than raising rates. It will return to support and I suspect even fall further. As the US and UK discuss raising rates (which is in headlines all the time now) funds will fly out of the Kiwi (and Aussie) and chase the yields and returns from the rising markets over there.
USDCAD – 1.0850 is proving quiet the support level. I wrote back in April this would be range bound and I stand by that. As for currencies that have the largest room to move I put this at the top of my list, well the Loonie actually. However, the stronger greenback will contain this pair to the range.
USDJPY – This is just deadest boring to look at, chopping either side of a flat ema highlights a distinct lack of commitment or direction.
Finally, looking to buy Yuan (and I know some were this week) you are not alone.