Morning Forex Report: Focus Firmly On FOMC

Market Commentary  

USD on the back-foot overnight after U.S CPI fell 0.1% m/m, the first decline since January, presenting a higher hurdle for Fed to remove policy accommodation in the ongoing FOMC meeting which ends today. The September FOMC decision is finally here. The street is filled with valid arguments for and against a rate hike tonight. Based on survey, the market approaches this event with slight long dollars on a very light positioning. Many market players choose to wait on the sidelines.

Encouraged by the softer final Eurozone August HICP, EURUSD saw lows of 1.1212 before rallying in the US session to highs of 1.1321. The pair continues to flirt around the 1.13 handle this morning. The final reading of the August Eurozone HICP inflation rate was revised down to 0.1% y/y, from a flash print of 0.2%, with the latest figure coming on the back of a 0.0% m/m rate, up from –0.6% m/m in July. Core inflation was seen steady at its preliminary reading of 0.9% y/y, itself unchanged from its July y/y rate. It still seems possible that the Eurozone will avoid renewed deflation and that CPI will trend gradually upwards in the final months of 2015.

GBPUSD offered the best returns yesterday in G10, higher by almost 1% to 1.5493 after strong wage growth and better unemployment rate. The currency is further helped by hawkish comments by BOE’s Governor Carney that UK interest rates may rise in early 2016 if the economy continues to grow and inflation pressures pick up

S&P has cut Japan’s sovereign rating to A+ from AA with outlook revised to stable from negative. The rating agency believes that the government’s economic revival strategy, dubbed “Abenomics”, will not be able to reverse this deterioration in the next two to three years. This may put some pressure on BOJ for further policy easing come the next meeting on 7 th October. Post announcement, USDJPY reversed from 119.60 level to end higher at 120.57 by NY close

Technical  Commentary 

EURUSD Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish

  • Range ahead of headline risk event 1.1375 – 1.1175 a topside breakout targets 1.1560 downside break targets 1.09. Caution counselled as prices may gap post FOMC decision.
  • Daily Order Flow bullish; OBV up, Linear Regression and Psychology rolling over to retest midpoints from above
  • Monitoring intraday price and Order Flow indicators on a test of 1.11 or 1.14

eu2015-09-17 07_32_03-

GBPUSD: Short Term (1-3 Days): Bullish  – Medium Term (1-3 Weeks) Bearish

  • Range ahead of headline risk event 1.56 -1.53 a topside break targets 1.58 a downside break targets 1.50. Caution counselled as prices may gap post FOMC decision.
  • Daily Order Flow bullish; OBV sideways to up, Linear Regression and Psychology bearish but attempting retest of midpoint from below
  • Monitoring intraday price action and Order Flow indicators on a test of 1.53 or 1.56

gu2015-09-17 07_36_37-

USDJPY: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bullish

  • Range ahead of headline risk event 1.22 – 119 a topside break targets 125 a downside break targets 116.Caution counselled as prices may gap post FOMC decision
  • Daily Order Flow bullish; OBV up, Linear Regression and Psychology supported at midpoints
  • Monitoring intraday price action and Order Flow indicators on a test of 119 or 122

uj2015-09-17 07_38_49-

EURJPY: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish

  • Range ahead of headline risk event 132 – 137 a topside break targets 141 a downside break targets 127.Caution counselled as prices may gap post FOMC decision
  • Daily Order Flow bullish; OBV up, Linear Regression and Psychology supported at retest of midpoints from above
  • Monitoring intraday price action and Order Flow indicators at 138 or 132

ey2015-09-17 07_40_53-

Posted in London Forex Report, tagged with on