The FOMC held rates at 5.25% as expected. The Bank of England’s Monetary Policy Committee is expected to raise rates by 25bp to 5.50% on continuing inflation concerns.
News and Events:
The FOMC held rates at 5.25% as expected. In the following statement, the Fed admitted that growth �slowed� but pointed to continued inflation risk as the dominant factor for their decision. The Euro has been in a 50-pip range the past 24 hours between $1.3517 and $1.3567.
The Bank of England’s Monetary Policy Committee is expected to raise rates by 25bp to 5.50% on continuing inflation concerns. Investors will pay close attention to the Bank of England’s Inflation Report which could give some indication of on future inflation and interest rate risk. Recent economic data coming out of the U.K. has showed moderate damping of growth, therefore a 50bp rate hike seems unlikely. The cable hit a high of $1.9999 yesterday and has since recessed and stabilized at $1.9940.
Today’s most interesting chart is EURNOK. A break above 8.1799 can signal a push to the upper-most trend-line to 8.2643 in the near term. Strong support is found at 8.0806.
Today’s Key Issues (time in GMT):
08.30 GBP Industrial Production (MoM) (MAR) 0.4% vs -0.2%
08.30 GBP Industrial Production (YoY) (MAR) 0.0% vs 0.3%
08.30 GBP Manufacturing Production (MoM) (MAR) 0.5% vs -0.6%
08.30 GBP Manufacturing Production (YoY) (MAR) 0.9% vs 1.2%
08.30 GBP Visible Trade Balance (MAR) -6.700B vs -6.791B
08.30 GBP Trade Balance Non-EU25 (MAR) -4.100B vs -4.068B
08.30 GBP Total Trade Balance (MAR) -4.200B vs -4.312B
10.00 EUR Euro-Zone OECD Leading Indicators (MAR)
11.00 GBP Bank of England Rate Decision 5.50% vs 5.25%
11.45 EUR ECB Rate Decision 3.75% vs 3.75%
12.01 NZD ANZ-Business NZ PMI (APR)
12.30 EUR ECB’s Trichet Speaks at ECB Monthly News Conference
12.30 CAD New Housing Price Index (MoM) (MAR) 0.4% vs 0.5%
12.30 CAD Merchandise Trade Balance (Cad. dollars) (MAR)5.0B vs 4.8B
12.30 CAD Merchandise Exports (MAR) 0.6% vs -2.1%
12.30 CAD Merchandise Imports (MAR) 0.3% vs 0.3%
12.30 USD Initial Jobless Claims (MAY 5) 315K vs 305K
12.30 USD Continuing Claims (APR 28) 2505K vs 2495K
12.30 USD Trade Balance (MAR) -$60.0B vs -$58.4B
12.30 USD Exports, BOP Basis (MAR) $126.6B vs $124.0B
12.30 USD Imports, BOP Basis (MAR) $185.3B vs $185.2B
12.30 USD Export Price Index (MoM) (APR) 0.3% vs 0.7%
12.30 USD Import Price Index (MoM) (APR) 1.0% vs 1.7%
12.30 USD Import Price Index, ex-Petro (MoM) (APR) 0.3% vs 0.3%
12.30 USD Import Price Index (YoY) (APR)
15.00 USD Fed’s Moskow Gives Welcome Remarks at Payments Conference
15.15 USD Fed’s Kroszner Speaks at Payments Conference in Chicago
17.30 USD ICSC Chain Store Sales (YoY) (APR)
18.00 USD Monthly Budget Statement (APR) $134.0B vs $118.8B
The Risk Today:
EurUsd: The Euro has recovered to above 1.3540 but downside risk is still at large. Look for a break of the 1.3629 resistance to confirm a move upwards. Strong support is found at 1.3515.
GbpUsd trading lower in the early session, breaking through stops below 1.9930. Strong support is found between 1.9881 and 1.9845. Anything below is very bearish. On the upside, bulls will want to see a break of the 1.9999 resistance marked in yesterday’s session.
UsdJpy bouncing off the lower trend-line back into the channel, as expected. Bulls are buying all the way up to 120.40 and want a confirmation with a break above 1.2047. Initial support at 119.95 is well placed.
UsdChf is finding strong resistance and congestion at 1.2192. Any dollar weakness today will force the pair down to an initial support at 1.2120 for a move to 1.2080.
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Resistance and Support:
By James Brandt - ACM Advanced Currency Markets, Geneva, Switzerland