FX News Today
- Fed day today – will they be as dovish as the markets seem to think? No change on the rates is expected but their musings on the future path of monetary policy, both conventional as well as with regards to its balance sheet position will be key for the USD and bond yields.
- Ahead of today’s awaited Fed announcement the Asian session also experienced some profit taking as markets expected a dovish turn.
- In the Asian session stocks traded narrowly mixed, with Chinese markets underperforming amid reports that China is pushing back against some of the US demands in trade talks.
- Overall though traders see signs of eagerness to come to a deal among Chinese officials ahead of further trade talks as US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are set to travel to China next week.
- Topix and Nikkei managed to close with gains of 0.26% and 0.20% respectively. The ASX, however, was down -0.31% at the close and Hang Seng and mainland China bourses are also in the red.
- US futures are little changed and the front end WTI future is trading at USD 58.97 per barrel.
Charts of the Day
Technician’s Corner
- EURUSD traded mostly above the 1.1345 Resistance level, even though very close to it, in anticipation of the Fed meeting. Indicators are showing signs of consolidation.
- GBPUSD is moving in a similar way as the EURUSD consolidating in the upper 1.32 area, for the 5th consecutive day, moving on a sideways channel, still below end-February highs. MACD and Stochastics support consolidation.
- USDJPY moved slightly up on the leading indicator announcement, which showed worse than expected performance compared to the previous month. After etching to 111.60, the pair declined slightly, a move supported by both MACD and Stochastics.
- XAUUSD is still above the $1300 mark, while some downwards momentum exists despite indicators pointing upwards. The Fed decision is expected to have a strong effect on Gold.
Main Macro Events Today
- Retail, Producer, and Consumer Price Indices (GBP, GMT 09:30) – Both the CPI and the RPI are expected to have registered the same growth as January, showing 2.5% y/y and 1.9% y/y respectively. The PPI is expected to have grown by 4.3% y/y compared to 2.9% y/y last month.
- Fed Interest Rate Decision (USD, GMT 18:00) – The eagerly awaited Fed decision is expected to shed light as to whether the 2 rate hike policy is to be continued or whether one rate hike is to be expected. Furthermore, comments on its potential balance sheet actions could also affect the markets.
- Gross Domestic Product (NZD, GMT 21:45) – New Zealand GDP is expected to have grown by 2.5% y/y in 2018Q4, compared to 2.6% in 2018Q3.
Support and Resistance
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Dr Nektarios Michail
Market Analyst
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