Thursday 31 January 2019
The US Federal Reserve last night left interest rates on hold and produced a dovish statement. Cue US$ falling across the board.I said yesterday that "no hike expected, indeed I'm dubious about whether they will/will be able to hike at all this year. Markets will be looking for clues on balance sheet normalization and their reiteration of patience being key generally."
Well they've taken out the gradual hike phrase and said it's prepared to adjust its normalization of the balance sheet and we're still seeing some pressure on the US Dollar overall as European trading gets underway but buyers lurking. Powell & Co sent a dovish message to the markets, albeit one I didn't think was that much of a surprise, but as always we've now seen what was priced in and general expectation was not such a downside tilt.
Meanwhile Brexit continues to grab a few headlines and will do so for a long long while yet but the jury remains fully out on which way the outcome will fall.
Prior to the FOMC GBPUSD had duly found support into those 1.3050 bids and has now found a new interim base around 1.3100 albeit with rally sellers into 1.3160, including me still poised.EURGBP has been tightly bound still with the usual month-end EURGBP demand in play and preventing deeper losses while helping to cap Cable.
I remain GBP bearish overall while definitely respecting the current GBP demand and will continue to rally sell then buy in the dips.
EURUSD has rallied through the decent offers/resistance at 1.1500 but failed into the next good tranche of sell interest at 1.1520 while USDJPY duly fell through the 108.80 support but has stopped at the next tranche at 108.60. USDCHF also fell a little further to test bids at 0.9920 but underpinned still by the EURCHF demand as Euro buying generally prevails albeit with sellers always poised.
AUDUSD has been tightly bound after the post-FOMC spike through the 0.7230 and 0.7250 sell interest to post fresh highs of 0.7277 while USDCAD has remained on the back foot having fallen through that line in the sand at 1.3180 and taken out the next layer of support at 1.3150.Both Canadian and Aussie $ finding support from firmer Gold and Oil prices respectively.
Fickle Forex markets ever prevailing so be ready with your entry/exit levels and orders as always.
I wish you a good day ahead.
Interbank Rate 08.15 GMT GBPUSD 1.3140 EURUSD 1.1505 EURGBP 0.8757 GBPEUR 1.1422 USDJPY 108.68 EURJPY 125.02 GBPJPY 142.82 GBPAUD 1.8047 GBPCAD 1.7232 GBPHKD 10.1874 AUDUSD 0.7276 EURCHF 1.1418 USDCAD 1.3128 USDCHF 0.9926 EURHKD 8.9191
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