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Wednesday, March 15th
The pound performs huge swings vs. its American counterpart at the opening of European trades for the second day in a row, that can’t be explained by any fundamental catalysts. Yesterday around the same time the GBP/USD pair fell for about 80 pip, refreshing its two-month lows, while today the pair performed the opposite swing, gaining more than a dollar and refreshing its seven-day highs at 1.2255 level. The only explanation of such big moves could be that someone opened very large order in lowered liquidity conditions in a transitional moment, when the market was shifting from Asian session to European. However, further gains are restricted as market’s participants remain cautious ahead today’s FOMC meeting. On the other hand, the pound finds extra support from the latest news, that UK PM T.May is ready to trigger Article 50 by the end of this month, as it was planned previously. Moreover, recent opinion polls showed that 57% of Scots want to remain in the UK, that is also positively affecting the pair. Today all eyes will be focused on FOMC Interest rate decision, while UK data from labor market and bloc of US reports will also be able to bring some short-term trading opportunities to investors during this Wednesday.
The EUR/USD pair is extending its recovery path this morning, having bounced off its overnight support, located at 1.0600 level. Currently the pair is trading with bullish bias in wake of US dollar’s minor retreat across the board amid cautious sentiments ahead of the Fed decision, which will be able to set up pair’s further directions for next few weeks. As Fed rate hike is considered as a done deal, traders will stay closely watching for any information about further monetary policy tightening and comments of Fed policymakers regarding further US economic outlook. Additionally, sharp GBP/USD pair’s moves also provided the main currency pair with some correlative support this morning. Beside Fed Interest Rate Decision, US inflation reports and retail sales data are also due to be released in NA session, while expected that its impact on the pair will be limited.
The dollar/yen pair is trading in a red territory this Wednesday, benefiting from strong cautiousness ahead of major event of this day. Since the probability of Fed rate hike is at above 90% according to market’s expectations, then traders will eagerly await for any clues on further Fed refi rate increases and comments from Fed Chair J.Yellen regarding any improvements in US economic outlook. In addition, following the Fed, the BoJ will announce its decision on monetary policy during next Asian session, but in this case the interest rate, most probably, will remain unchanged. Today FOMC meeting will take center stage, while bloc of US data and upcoming BoJ decision will also be able to bring some impact to the pair.
The NZD/USD pair remains firmer this Wednesday, following positive NZ data. Currently the pair is trading in the region of 0.6940, extending its overnight recovery into European session, as New Zeeland published upbeat Current Account data in Asia. Moreover, minor correction of the US dollar amid traders’ nervousness ahead of the key event of this week and sharp recovery of oil prices in wake of drop in US crude oil inventories by API are additionally collaborating with pair’s bid tone. Looking ahead, today the US will release inflation figures and Retail Sales data, while Fed Interest Rate Decision will hog the limelight in NA trading session.
The main events of the day:
UK Average Earnings Index +Bonus – 11.30 (GMT +2)
UK Claimant Count Change – 11.30 (GMT +2)
US Core CPI – 14.30 (GMT +2)
US Core Retail Sales – 14.30 (GMT +2)
US Retail Sales – 14.30 (GMT +2)
US Crude Oil Inventories – 16.30 (GMT +2)
Fed Interest Rate Decision – 20.00 (GMT +2)
FOMC Press Conference – 20.30 (GMT +2)
NZ GDP – 23.45 (GMT +2)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.0558 R. 1.0684
USDJPY S. 114.13 R. 115.49
GBPUSD S. 1.2048 R. 1.2274
USDCHF S. 1.0052 R. 1.0132
AUDUSD S. 0.7520 R. 0.7598
NZDUSD S. 0.6870 R. 0.6964
USDCAD S. 1.3413 R. 1.3527
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