Morning View: Knights of the Round Table

FOMC Minutes:
Along with the expected, neutral ‘data dependent’ rhetoric throughout the statement, the Fed also clearly signalled that they believe the US economy is stronger than what the first quarter data indicates and that they are still on track to raise interest rates by the end of this calendar year.

Many participants, however, thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied, al-though they generally did not rule out this possibility.

Most participants felt that the timing of the first increase in the target range for the federal funds rate would appropriately be determined on a meeting-by-meeting basis and would depend on the evolution of economic conditions and the outlook.

This has reassured the market, and USD bulls that the Fed isn’t getting cold feet when it comes to tightening and that they are still on track most probably for a September hike.

USDX Daily:

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On the USDX chart that we have been watching, you can see that price has finally regained a level of previously broken support and on the back of this Fed retoric, we’re on track to regain that trend line and push up once again to the highs.

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On the Calendar Today:
Chinese Flash Manufacturing data the big mover on the calendar in Asia this morning.

Just keep in mind that the markets are still digesting the FOMC minutes around today’s releases.

Thursday:
AUD MI Inflation Expectations
CNY HSBC Flash Manufacturing PMI

EUR Flash Manufacturing PMI
EUR German Flash Manufacturing PMI
GBP Retail Sales
EUR ECB Monetary Policy Meeting Accounts

USD Unemployment Claims
USD Existing Home Sales
USD Philly Fed Manufacturing Index

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Chart of the Day:
With the FOMC Minutes last night not altering the theme of USD strength, we take a look at where AUD/USD is sitting.

AUD/USD Daily:

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With AUD/USD poking above the 80c level to knock out any weak shorts, we’ve sold off vertically from here. Price now has come back to it’s most recent swing low on the lower time frame charts and into the green supply zone I have marked where we could expect some action.

AUD/USD Hourly:

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On a lower time frame hourly chart, the way price has come off it’s highs quite aggressively is highlighted by the channel the pair is moving inside.

Combining these two views, we are potentially sitting at higher time frame support and the way price acts around it’s hourly channel edges will be watched to refine any trade entries.