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Thursday, September 21st
The EUR/USD pair remains under bearish pressure on Thursday on the back of renewed buying interest around the greenback, underpinned by the hawkish outcome of the FOMC meeting. Yesterday the pair dipped for more than 160 points, following hawkish surprise delivered by the Fed. As it was widely expected, the Fed left its interest rate unchanged, while making markets confident that there will be another rate hike this year and three more in 2018. Moreover, the regulator officially announced that it would start shrinking balance sheet in October, following schedule, laid out in July. Adding to this, the Fed stressed that recent weakness of the inflation remains temporary, expecting that it will reach regulator’s target level of 2% in the mid-term projection. Today the markets will continue to digest the outcome of the recent event, which will continue to support the greenback across the market, while Philly Fed manufacturing index and ECB President M.Draghi’s speech, scheduled for the NA session, will provide the pair with additional directional impetus.
The USD/JPY pair remains well bid on Thursday, having refreshed its monthly highs at 112.71 level, following the pack of crucial events. Yesterday the pair received strong bullish momentum and rose for more than 100 pips on the back hawkish of outcome of the Fed meeting. The US regulator kept its interest rate unchanged, while comments of FOMC members regarding further monetary policy tightening measures lifted sentiments around the greenback. Furthermore, the pair received additional upside impetus, after the BoJ failed to provide any surprises, leaving its interest rate and asset purchase program unchanged, while BoJ Governor Haruhiko Kuroda during his post-meeting Q&A session once again reiterated Bank’s readiness to implement additional monetary policy stimulus if needed. This statement of Mr.Kuroda has denoted divergence between monetary policies of the Fed and BoJ, thereby providing significant support to the pair. Looking ahead, broad market sentiments, backed by recent key risky events, will continue to determine pair’s further direction, while the US data will be able to provide investors with additional trading opportunities during the NA session.
Today the AUD/USD pair experiences double trouble, extending its huge retreat from 2-week highs, marked during the last NA session. On Wednesday, the Fed finally announced that it would begin the balance sheet normalization in October, while also noting that it is expecting another rate hike this year. This outcome of the Fed meeting appeared extremely supportive to the US dollar, sending the pair below the level of 0.80. Moreover, the pair received additional bearish impetus during Asia after RBA Governor Phillip Lowe delivered his dovish speech. The RBA Chief stressed that the economy of Australia is now in the wrong position to consider any monetary policy tightening measures and rising rates abroad have no automatic implications for RBA’s monetary policy, which in turn only accelerated pair’s fall. Today the US economy will bring only Philly Fed manufacturing index, so speculations around another Fed rate hike this year and the US dollar price dynamics will remain key determinants for the pair throughout this session.
Today the GBP/USD pair traces broad market trend and consolidates its positions below the level of 1.3500 after sharp drawdown, triggered by outcome of yesterday’s Fed monetary policy meeting. On Wednesday, the pair once again refreshed its annual tops on the level of 1.3658, however, the spike was short lived and the pair dropped to the vicinity of 1.3450 level. As it was widely expected, the Fed left its interest rate unchanged, while following FOMC statement showed that Fed members are expecting another rate hike this year, which sparked massive demand for the greenback. However, the pair managed to correct slightly higher after its retreat, as investors are still digesting BoE Governor M.Carney’s comments, saying that the BoE is also considering rate increase. Moreover, yesterday's positive UK retail sales data also managed to support the pound somewhat this Thursday. Now market’s focus shifts towards the manufacturing data from the Philly Fed, while broader market sentiment around the greenback will remain an exclusive driver for the pair throughout this trading session.
The main events of the day:
Philadelphia Fed Manufacturing Index – 15.30 (GMT +3)
ECB President M.Draghi’s Speech – 16.30 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1757 R. 1.2101
USDJPY S. 110.48 R. 113.38
GBPUSD S. 1.3329 R. 1.3737
USDCHF S. 0.9537 R. 0.9797
AUDUSD S. 0.7922 R. 0.8156
NZDUSD S. 0.7234 R. 0.7494
USDCAD S. 1.2099 R. 1.2503
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