FX market turn over Euro as FOMC left rates on hold

The FOMC left rates on hold at 2% which was widely expected but voiced their growing concern about inflation but also said that they expect price pressure to moderate through the year. These comments lead many to believe that the chance of the Fed hiking rates has become more limited and thus we see an easing of the Dollar against the Euro. Overall the chance of the Fed raising rates during Q3 has already been priced into the market so it’s likely that the Dollar bulls will be disappointed with the news. With the ECB likely to be raising rates at some stage in the near term then the big winner was the Euro. Oil dipped to just above $134 barrel on a surprise rise in stocks. Plenty of data released later including US home sales which may have climbed as prices have become attractive to those who can get credit.

News and Events:


While the Dollar reacted to the decision by the Federal Reserve and weakened immediately after the announcement, Asia has stepped back and been very quiet with tight range trading.

The FOMC left rates on hold at 2% which was widely expected but voiced their growing concern about inflation but also said that they expect price pressure to moderate through the year. These comments lead many to believe that the chance of the Fed hiking rates has become more limited and thus we see an easing of the Dollar against the Euro. Overall the chance of the Fed raising rates during Q3 has already been priced into the market so it’s likely that the Dollar bulls will be disappointed with the news. With the ECB likely to be raising rates at some stage in the near term then the big winner was the Euro.

EurJpy rose to 169.17 record high and closed up 0.62% at 168.97. EurUsd rose 0.58% to 1.5665 after the Fed statement. UsdJpy jumped up to 108.43 before slipping back to 107.86 up 0.04%. GbpUsd rose after the FOMC 0.16% to 1.9740. EurGbp rose 0.42% to 0.7937. UsdChf dropped 0.5% to 1.0357.

Oil dipped to just above $134 barrel on a surprise rise in stocks. Plenty of data released later including US home sales which may have climbed as prices have become attractive to those who can get credit. BOE inflation report for May will be another interesting piece of news that could see some two-way play in Sterling.






Today's Key Issues (time in GMT):


07:30 DKK May Unemployment 1.7% vs 1.8%
07:30 SEK May PI 0.1% vs 0.4% (MoM)
07:30 SEK May PI 2.9% vs 2.9% (YoY)
08:00 EUR May Euro-zone Money – Private loans 10.3% vs 10.6%
08:00 EUR May Euro-zone Money – M3 annual growth 10.4% vs 10.6%
08:00 NOK June Reg’d unemployment 1.6% vs 1.5%
08:45 GBP BoE’s King testify to Parliamentary Treasury Committee
12:30 USD Q1 Core PCE prices final 2.1% vs 2.1%
12:30 USD Q1 PCE prices final 3.5% vs 3.5%
12:30 USD Q1 Corporate Profits Rev 3.8% vs 3.8%
12:30 USD Q1 GDP deflator final 2.6% vs 2.6%
12:30 USD Q1 GDP final 1% vs 0.9%
12:30 USD Q1 GDP sales final 0.8% vs 0.7%
12:30 USD weekly Initial claims 380k vs 381k
13:30 USD Fed’s Kohn speaks at ECB conference on monetary policy
14:00 USD May Existing home sale-units 4.93m vs 4.89m
22:45 NZD Q1 GDP annual avg 3.1% vs 3.1%
22:45 NZD Q1 GDP annual 2.1% vs 3.7%
22:45 NZD May Trade Balance month 200M vs -334M
22:45 NZD May Trade Balance year -4.46B vs -4.65B
The Risk Today:

EurUsd:
Current trading range is still 1.5400 to 1.5800. Yesterday pull over 1.5600 in putting upside in sight. Initial resistance holds 1.5844 June 9th high. A break up there would reopen the way up to 1.6000 Pivot point resistance ahead of key resistance 1.6200 market target. On the downtrend, weakness below 1.5400 will put the current light 2-month uptrend on hold. This may open way down to 1.5000 key level. Support holds 1.5304 13th June low.


GbpUsd:
Cable is still consolidating in 1.9400 – 1.9800 trading range. It closes yesterday at 1.9770. On the upside, psychological 2.0000 level stays into focus. On the downside, a reversal below 1.9600 might bring again focus on 1.9337 January low and 1.9105 (50% retracement of 1.7049 – 2.1162 advance). Strong support holds 1.9363 20th February and 14th May low.


UsdJpy:
Current 3-month uptrend holds but stays under 108.59 16th June high. Further advance would put 110.10 strong resistance (Trendline) into focus and mid January double top ahead of 111.92 early January high. Any profit taking to and return lower than 105 level might send the market back down to 100 – 104 consolidation trading range. Strong support hold 106.59 former resistance (38.2% retracement of 124.15 – 95.74 decline).


UsdChf:
Market is currently trading in 1.0200-1.0600 range. Early January double top 1.1191 marks strong resistance. Minor support holds 1.0305 Friday low. Initial support holds 1.0148 June 9th low. Further weakness may open the way toward 0.9637 17th March low. June 13th 1.0541 high holds initial resistance.



Resistance and Support:



By
Jean-Claude Braha
- ACM Advanced Currency Markets, Geneva, Switzerland
_____________________________________
Provided by ACM: http://www.ac-markets.com