Spotlight on FOMC rate announcement.

Currency Trading Summary

U.S. Dollar Trading (USD) was range bound as traders remained tepid ahead of the much anticipated FOMC rate announcement on Wednesday. On last measurement the markets had priced a 74% possibility that the Fed officials will move to cut rates by a further 50 bps. On the data front, Durable Goods for the month of December was released well above expectations at 5.2% (Forecast: 1.5%) whilst the Previous was revised higher to 0.5%, causing doubt that the Federal Reserve would cut the lending rate by half a percentage point. In U.S. share markets the NASDAQ was up by 8.15 points (+0.35%) whilst the Dow Jones up by 6.94 (+0.43%). Crude oil prices rose slightly by US$0.43 a barrel to US$91.43 on the back of expectations that a rate cut in the US will buoy demand for oil.  Looking ahead, all focus will be placed on the FOMC rate announcement tonight, with markets anticipating a 50 bps rate cut. Accompanying the Rate announcement will be the fourth quarter release of GDP. 

The Euro (EUR) remained well supported on Tuesday holding firm above key levels, suggesting the Euro had upside potential in light of the Fed rate announcement due Wednesday. Overall the EURUSD traded with a low of 1.4737 and a high of 1.4798 before closing the day at 1.4776 in the New York session. Key data out of the Eurozone will surround the German IFO index.

The Japanese Yen (JPY) fell against a number of majors, as global stock rallied ensuring the USDJPY returned to its funding role. On the data front Household Spending was released at 2.2% (Forecast: -0.2%; Prior: -0.6%), Unemployment Rate 3.8% (Forecast: 3.9%; Prior 3.8% and Retail Sales 0.2% (Forecast: 0.1%; Prior: 1.6%). The USDJPY traded with a low of 106.40 and a high of 107.24 before closing the day at 106.98 in the New York session.  

The Sterling (GBP) rose to its highest level against the dollar so far this year after a report calmed fears over the UK retail sector and dampened expectations of aggressive rate cuts by the BoE. Although CBI retail sales survey did touch a 14 month low, analysts did note that sales volumes in January were still stronger than expected. Overall the GBPUSD traded with a low of 1.9814 and a high of 1.9928 before closing the day at 1.9895 in the New York session.

The Australian Dollar (AUD) was steady as financial markets await the US Federal Reserve interest rate decision at 1915GMT on Wednesday. The AUD did get a light boost from rebounding global stocks. Overall the AUDUSD traded with a low of 0.8860 and a high of 0.8905 before closing the day at 0.8886 in the New York session.

Gold (XAU) was little changed throughout the day ahead of the FOMC rate announcement. XAU traded with a low of 917.50 and a high of 933.10.    

TECHNICAL COMMENTARY

Euro – 1.4765
Initial support at 1.4661 (Jan 25 low) followed by 1.4592 (Jan 24 low). Initial resistance is now located at 1.4799 (Jan 28 high) followed by 1.4859 (Jan 16 high).
 
Yen – 106.90
Initial support is located at 106.01 (Jan 28 low) followed by 104.97 (Jan 23 low). Initial resistance is now at 107.89 (Jan 25 high) followed by 107.95 (Jan 16 high)
 
Pound – 1.9890
Initial support at 1.9814 (Jan 29 low) followed by 1.9731 (Jan 28 low). Initial resistance is now at 1.9929 (Jan 29 high) followed by 2.0034 (38.2% retracement of 2.1161 to 1.9338 decline)
 
Australian Dollar – 0.8875
Initial support a 0.8768 (Jan 28 low) followed by 0.8691 (Jan 24 low). Initial resistance is now at 0.8907 (Jan 29 high) followed by 0.9022 (Jan 15 reaction high)
 
Gold – 927.80
Initial support at 908.10 (Jan 23 low) followed by 876.80 (Jan 23 high). Initial resistance is now at 933.30 (Jan 29 high) followed by 950.0 (Psychological round number)