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Wednesday, June 14th
The EUR/USD pair is showing lack of direction this Wednesday, as cautious moods are prevailing across the market ahead of upcoming big event. Today the market remains in anticipation of another rate increase of this year from the Fed. However, since a rate hike is a done deal, investors will await for any remarks of FOMC members whether the regulator still sees a potential for further monetary policy tightening measures in 2017. Moreover, broad nervousness and weaker positions of the US dollar against its main competitors should keep sentiments around the Euro underpinned today. Looking ahead, a lack of relevant macro news from the Eurozone will leave the major at the mercy of global markets sentiments during European trading hours, while busy NA session will be able to shape up pair’s further direction.
The GBP/USD pair was trading with a slight bearish bias in the Asian session, however, keeping its range within 20 pips near the level of 1.2750 amid strong nervousness across the market. Yesterday the pair managed to recover most part of this week losses, having risen from the level of 1.2642 to its overnight highs, marked at 1.2756 spot, on the back of strong UK inflation report and some profit taking actions after pound’s sharp drop, backed by UK election results. Today all eyes will be glued to the FOMC decision, however, odds that the Fed will increase its rate today remain close to 100%, so attention should shift to FOMC Economic Projections, which expectedly will split the light on Fed’s further actions. Besides FOMC meeting, today traders will also pay attention to the UK data from the labor market and set of macroeconomic reports from the US, which will keep investors busy ahead of today’s key event.
The USD/CAD pair extends its losing streak for the fifth session in a row, remaining within striking distance of its 3-1/2 month lows, touched yesterday at 1.3211 level. Seems that Canadian bulls are still benefiting from rhetoric of BoC members, who stated that the Bank is going to recalibrate its monetary policy, thereby increasing odds for a rate increase by the end of this year. However, the pair has subdued its downside rally, as investors remain cautious ahead of the key risky event of this week - Fed Interest Rate Decision. Nevertheless, as the market has already fully priced in rate increase, the accompanying statement and comments of Fed members might cause bigger reaction, as investors expect another rate hike by the end of this year. Also today, market participants will pay attention to the US inflation report, Retail Sales and Crude Oil Inventories, which will also be able to provide some short-term trading opportunities during the NA session.
The Aussie remains the best performer of this Wednesday sending the AUD/USD pair away from its overnight lows, marked at 0.7532, mostly ignoring broad market’s cautiousness, bloc of mixed Chinese data and subdued sentiments on the commodity market. By the moment of writing, pair was trading within striking distance of its daily highs, posted earlier this morning at 0.7562 handle, as ongoing weakness of the US dollar is providing significant support to the pair. However, further pair’s gains seem unlikely, as investors remain nervous, refraining of placing any directional bets ahead of the big event. Today we will have busy trading session, featuring the US inflation report, US Retail Sales and Fed Interest Rate Decision, which will hog the limelight in NY afternoon.
The main events of the day:
UK Average Earnings Index +Bonus – 11.30 (GMT +3)
UK Claimant Count Change – 11.30 (GMT +3)
US Core CPI – 15.30 (GMT +3)
US Core Retail Sales – 15.30 (GMT +3)
US Retail Sales – 15.30 (GMT +3)
US Crude Oil Inventories – 17.30 (GMT +3)
Fed Interest Rate Decision – 21.00 (GMT +3)
FOMC Press Conference – 21.30 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1167 R. 1.1245
USDJPY S. 109.53 R. 110.53
GBPUSD S. 1.2601 R. 1.2831
USDCHF S. 0.9644 R. 0.9722
AUDUSD S. 0.7502 R. 0.7582
NZDUSD S. 0.7174 R. 0.7250
USDCAD S. 1.3146 R. 1.3372
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