US FOMC continues to remain patient

Australian Dollar:

The Australian dollar continued to mount a comeback against the recently relentless US dollar on Wednesday jumping significantly higher as a result of uplifting local print. Inflation data was the main protagonist coming in well ahead of expectations. The outcome of these numbers has left the chances of a rate cut next week sitting lower as many believe that inflation is currently sitting in a healthy position. The AUD rallied over 100 points to the US80cent handle before correcting slightly below in anticipation of the US rate meeting overnight. As expected the US Fed did not surprise and the Aussie was hardly affected. The AUD opens this morning at similar levels to yesterday at 0.7931 and all eyes will be sitting on local import prices to see if the AUD can continue its recent attempt at a recovery against the US dollar.

• We expect a range today of 0.7890 – 0.7970

New Zealand Dollar:

With no local data once more to provide the New Zealand dollar with direction the Kiwi traded in a tight range for a third consecutive day. Touching highs of 0.7459 and lows of 0.7426 the higher yielding currency had little to react on waiting on European and US markets for guidance. Overnight in anticipation of the US fed’s announcement the Kiwi remained steady and an unsurprising release kept rates on hold with the Kiwi remaining on course, opening this morning marginally stronger at 0.7442. Shortly after all eyes shifted to Today’s announcement which will certainly be the highlight of the week as the domestic official cash rate and accompanying statement is to be announced early on.

• We expect a range today of 0.7350 – 0.7470

Great British Pound:

With no local data to drive the Great British Pound investors waited patiently on the US Federal Open Market Committee’s meeting for guidance. The GBP was trading close to 10 day highs against the US dollar however as the US results were released the Sterling began to trail off. Cable touched lows of 1.5141 as the US Fed indicated patience for now however an interest rate rise would be certainly on the cards in the upcoming next few months. The GBP struggled against the higher yielding currencies losing out to the NZD(2.0375) and the AUD(1.9119) which posted impressive inflationary numbers during Asian trade. Today all eyes will focus on the Housing Price Index and European numbers for guidance.

• We expect a range today of 1.9100 – 1.9180

Majors:

The Euro continued to lose ground against its US counterpart overnight however this time the loss was due to offshore data as opposed to local numbers. The main event on Wednesday was the US FOMC meeting however was anticipated by many to be an event that would not rock the boat. As expected the decision was to leave rates on hold and the reiteration of the words patient continued to be used. It is now more likely than ever that rates will be lifted in the coming few months and investors will watch closely for further indications as to a more accurate time frame. The US dollar was slightly stronger across the board following the releases gaining against a basket of major currencies. All eyes today will focus on home sales and unemployment numbers from the US.

Data releases:

• AUD: CB Leading Index m/m, Import Prices q/q
• NZD: Official Cash Rate, RBNZ Rate Statement, Trade Balance
• JPY: Retail Sales
• GBP: Nationwide HPI m/m, CBI Realized Sales
• EUR: German Prelim CPI m/m, German Unemployment Change, M3 Money Supply y/y, Private Loans y/y, Italian 10-y Bond Auction
• USD: Unemployment Claims, Pending Home Sales m/m, Natural Gas Storage