Morning Report: Markets Move On FOMC

Key Data Releases Today

1230GMT – USD GDP exp 3.0% v 4.6%
1230GMT – USD Continuing Claims (OCT 18) exp 2352K v 2351K
1230GMT – USD Core Personal Consumption Expenditure  exp 1.4% V 2.0%
1230GMT – USD Gross Domestic Product Price Index (3Q A) exp 1.4% v 2.1%
1230GMT – USD Initial Jobless Claims (OCT 25) exp 285K V 283K
1230GMT – USD Personal Consumption (3Q A) exp 1.9% V 2.5%
1300GMT – EUR German Consumer Price Index (YoY) (OCT P) exp 0.9% V 0.8%
1300GMT – EUR German Consumer Price Index (YoY) (OCT P) exp 0.9% V 0.8%
1300GMT – EUR German Consumer Price Index – (MoM) (OCT P) exp -0.1% V 0.0%
1300GMT – EUR German Consumer Price Index (MoM) (OCT P) exp -0.1% V 0.0%


Overview:

Yesterday’s FOMC release highlighted that the Fed will cease it’s bond purchase program cting improved labour market conditions. Evene though the Fed pledged to keep low borrowing costs for a “considerable time” they did highlight wilingness to act sooner on improved conditions downplaying lower expectation inflations. USD rallied broadly on the back of this release with many market participants now anticipating an earlier rate rise versus recent pushed out expectations. Main risk for all USD pairs today will be the GDP release and jobless claims.

  •  USD higher after FED signal willingness to act sooner hould conditions improve faster than expected
  • CAD was higher initially then fell on comments from Gov Poloz that the country still has considerable excess capacity and that continued monetary stimulus is needed to close the gap
  • EUR down sharply on FOMC release Yesterday and In line Undemployment data has doen little to support the pair this morning.
  • GBP fell in tandem with EUR against hawkish USD otlook. Lack of domestic data this week will leave GBP trading on FOMC digest
  • JPY fell strongly against USD Yesterday
  • AUD saw a positive start end badly on the back of the FOMC release

Key Trades

USDCAD: Neutral – No Change
EURUSD: Neutral – No Change
GBPUSD: Bearish – No Change
USDJPY: Bullish – No Change
AUDUSD: Neutral – No Change

Analysis

EURUSD: Neutral – No Change

  • Shorts from last week saw stops triggered at breakven on the pre FOMC grind higher
  • Price has since broken down in line with original bearish view and has pushed through the Bullish candle low that acted as support last week
  • Order Flow Regression close to crossing lower here with Psychology still just above it’s midline.
  • Break of NFP lows to signal further downside

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USDCAD: Neutral – No Change

  • Longs held from last week were closed out for a small loss on the bearish close below trendline and weekly lows.
  • Order Flow Indicators have since crossed back to the uspide following the FOMC release
  • Will take spec long on break higher from Yesterday’s candle

0c

GBPUSD: Bearish – No Change

  • Still holding shorts from last week
  • Price broke down on the back of the FOMC release
  • NFP lows remain the initial target

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AUDUSD: Neutral – No Change

  • Exited shorts from last week as price has closed above the pin bar entered on and also the upper line of the contracting triangle formation.
  • Price took a dive on back of FOMC but failed to break convincingly back inside contracting triangle formation.
  • Order Flow indicators have crossed to the upside signalling strength.

0a

USDJPY: Bullish – No Change

  • Still holding longs from the rebound off the mid 105 breakout area retest.
  • Positions increased on break higher last week and will be looking for a retest of that level to act as support for continued upside this week
  • Price broke higher Yesterday on back of FOMC release and initial NFP high target is in reach now 

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