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Thursday, December 14th
The EUR/USD pair keeps its positions above the level of 1.1800, however, having retreated from its daily highs during the Asia trading session on the back of the US dollar’s correction. Yesterday the pair received strong bullish impetus, despite hawkish Fed interest rate decision. As it was widely expected, the Fed increased its interest rate by 0.25%, however, failing to provide anything new regarding its further monetary policy. According to projections, the FOMC expects three more rate hikes during 2018, but the Fed Chair J.Yellen still believes that it could take a longer period for inflation to reach its target level of 2%. These dovish comments became the main reason of the US dollar’s retreat across the market. On the other hand, today investors’ eyes will remain glued to the ECB monetary policy decision. Expected that the CB will keep its rate unchanged, while any updates on economic forecasts could trigger a spike of volatility during the European trading session. Besides the ECB meeting, the US will publish retail sales numbers, which could provide additional impetus for the pair during the NA trading session.
The GBP/USD pair keeps positive tone on Thursday, remaining above the level of 1.3400. Yesterday the pair caught fresh bids following unimpressive outcome of the FOCM meeting. The regulator increased its interest rate by 25 bps in line with expectations, while Fed Chair J.Yellen’s comments regarding weaker inflation negatively affected US dollar positions. On the other hand, today the BoE will be another regulator, which will hold a meeting on monetary policy. Markets do not expect that the CB will increase its interest rate, while any comments by BoE Governor M.Carney on further monetary policy projections will have notable impact on the UK currency. Also today, investors will pay attention to the retail sales data from both economies, which will also affect pair’s further trajectory.
The AUD/USD pair continues to receive support from bulls today, now consolidating its positions in the region of its monthly highs, marked at 0.7675 spot. One of the main reasons of pair’s upsurge remains yesterday’s not enough hawkish Fed statement, which failed to surprise markets with additional details regarding further Fed monetary policy. Moreover, another reason of bullish trend of the pair remains bloc of strong data from the Australian labor market, which added some extra support to the Aussie. On the other hand, slight correction of the US dollar after its notable drawdown, backed by FOMC meeting, and downbeat Chinese industrial production data are lending negative pressure on the pair, thus limiting its further bullish trend. Moving ahead, now traders are looking forward to the US retail sales data, which will bring some additional trading opportunities during the NA session, while US dollar price dynamics will continue to navigate the pair on Thursday.
The USD/JPY pair remains under pressure at the second half of this week, as investors are still digesting outcome of the FOMC meeting. As it was widely expected, yesterday the Fed increased its interest rate by 25 bps. However, the dollar came under strong selling pressure across the market, as Fed didn’t provide anything new regarding its further monetary policy, while markets had already priced-in hawkish Fed decision. Moreover, prevailing risk aversion in wake a slew of central bank policy decision due later today and positive Japan’s industrial productions additionally weight the pair this Thursday. Today the pair will remain influenced by broad risk sentiments and the US dollar price dynamics ahead of US retail sales numbers that will bring some directional impetus to the pair during the NA session.
The main events of the day:
SNB Interest Rate Decision – 10.30 (GMT +2)
German Manufacturing PMI – 10.30 (GMT +2)
UK Retail Sales – 11.30 (GMT +2)
BoE Interest Rate Decision – 14.00 (GMT +2)
ECB Interest Rate Decision – 14.45 (GMT +2)
ECB Press Conference – 15.30 (GMT +2)
US Core Retail Sales – 15.30 (GMT +2)
US Retail Sales – 15.30 (GMT +2)
BoC Governor S.Poloz’s Speech – 19.25 (GMT +2)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1693 R. 1.1897
USDJPY S. 111.73 R. 113.97
GBPUSD S. 1.3268 R. 1.3500
USDCHF S. 0.9787 R. 0.9961
AUDUSD S. 0.7522 R. 0.7696
NZDUSD S. 0.6896 R. 0.7090
USDCAD S. 1.2739 R. 1.2917
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