Hi there James here
Markets are quietly in range today with dollar retreating some gains against Euro and Swissy. FOMC announcement was an anti-climax after strong dollar rally this week. Fed's statement was rather balanced and less hawkish than expected, noting risks on both growth and inflation. The Fed is believed to be firmly on hold in the near future and gave no hints on when the next move will be. Technically speaking, there is no sign of a top in dollar against Sterling and Aussie yet. However, intraday upside momentum is clearly diminishing against Euro and Swissy as traders are holding bets ahead of another big even risks, ECB announcement tomorrow.
One of the developments to note is yen's volatility. So far the Japanese yen has been extremely choppy in crosses. However, USD/JPY, EUR/JPY and GBP/JPY are all still holding above key near term support and the price actions are supporting the case that these pairs are just in consolidation. On the other hand, clear five wave pattern is now seen in AUD/JPY's decline from 104.43 high arguing that a rebound is due. Having said that, some weakness in the Japanese will likely be seen for the rest of the week with prospect of break out in particular in USD/JPY. Japanese leading indicator dropped less than expected by -1.7% in Jun.
Sterling continues to be pressured against dollar and in crosses. The National Institute of Economic Social Research (NIESR) forecasts that UK GDP growth will slow to slowest pace since 2005 at 0.1% in the three months to July. Nationwide consumer confidence in UK dropped further to 51 in Jul.
James
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