Forex News and Events
FOMC rate decision due tomorrow
One month after the September FOMC meeting, which ended up with no monetary policy change, Fed members are gathering again. Traders will closely look at what will be declared as the power struggle between hawkish and dovish Fed members reaches a climax. While we do not expect any change in the current monetary policy, the minutes will be scrutinized to grab any hint about a further move.
We believe that no rate hike will happen this year with U.S. economic data printing mixed. It has been several months since the Fed announced a monetary policy normalisation, the end of the zero interest-rate policy. Slowdown in the global economy, and in particular in China, have, according to Fed officials, prevented a first rate hike, which would have been the first one in almost a decade.
Janet Yellen declared that she is awaiting confirmation of U.S. recovery before making any move.
The Fed’s dual mandate to promote maximum sustainable employment and target inflation of 2% is for the time actually failing in its mission. Indeed the dollar-complex has constantly strengthened since the beginning of the year. The inflation pressures are not likely to stop. China is the country with the largest U.S deficit. As China debased its currency three times in August, the trade deficit with China is likely to widen even more. As a result, U.S inflation will stay low.
The likelihood for a rate hike this year is almost null. Janet Yellen promised a 2015 rate hike. Her credibility is now crashing. Her hesitancy to act, to increase rates by a quarter point is sending completely the wrong signal. It is leading us to now properly wonder whether the U.S. economy is actually in a worse state than we have been led to believe. In the foreign exchange markets, the EURUSD is likely to move on some Fed members’ declarations. We think that markets are expecting a proper timeframe for a rate hike. If this does not happen then the true state of the U.S economy will really be brought into question.
EURUSD - Bullish Consolidation
Today's Key Issues | Country/GMT |
Sep M3 Money Supply YoY, exp 5,00%, last 4,80% | EUR/09:00 |
3Q South Africa Unemployment, exp 25,10%, last 25,00% | ZAR/09:30 |
3Q A GDP QoQ, exp 0,60%, last 0,70% | GBP/09:30 |
3Q A GDP YoY, exp 2,40%, last 2,40% | GBP/09:30 |
Aug Index of Services MoM, exp 0,20%, last 0,20% | GBP/09:30 |
Aug Index of Services 3M/3M, exp 1,00%, last 0,80% | GBP/09:30 |
Oct FGV Construction Costs MoM, exp 0,21%, last 0,22% | BRL/10:00 |
Sep PPI Manufacturing MoM, last 1,29% | BRL/11:00 |
Sep PPI Manufacturing YoY, last 8,49% | BRL/11:00 |
ECB's Nowotny Speaks in Zurich | EUR/11:15 |
Sep Outstanding Loans MoM, last 0,70% | BRL/12:30 |
Sep Total Outstanding Loans, last 3132b | BRL/12:30 |
Sep Personal Loan Default Rate, last 5,50% | BRL/12:30 |
Sep Durable Goods Orders, exp -1,50%, last -2,00%, rev -2,30% | USD/12:30 |
Sep Durables Ex Transportation, exp 0,00%, last 0,00%, rev -0,20% | USD/12:30 |
Sep Cap Goods Orders Nondef Ex Air, exp 0,20%, last -0,20%, rev -0,80% | USD/12:30 |
Sep Cap Goods Ship Nondef Ex Air, exp 0,40%, last -0,20%, rev -0,40% | USD/12:30 |
Aug S&P/CS 20 City MoM SA, exp 0,10%, last -0,20% | USD/13:00 |
Aug S&P/CS Composite-20 YoY, exp 5,10%, last 4,96% | USD/13:00 |
Aug S&P/CaseShiller 20-City Index NSA, exp 182,26, last 181,9 | USD/13:00 |
Aug S&P/Case-Shiller US HPI MoM, last 0,37% | USD/13:00 |
Aug S&P/Case-Shiller US HPI YoY, exp 4,80%, last 4,69% | USD/13:00 |
Aug S&P/Case-Shiller US HPI NSA, last 175,11 | USD/13:00 |
Oct P Markit US Composite PMI, last 55 | USD/13:45 |
Oct P Markit US Services PMI, exp 55,5, last 55,1 | USD/13:45 |
Oct Consumer Confidence Index, exp 103, last 103 | USD/14:00 |
Oct Richmond Fed Manufact. Index, exp -3, last -5 | USD/14:00 |
Bank of Canada Deputy Lane Speaks in Halifax NS | CAD/15:05 |
Bank of England's Shafik Speaks in London | GBP/16:00 |
ECB Executive Board member Coeure Speaks in Mexico City | EUR/22:00 |
Sep Eight Infrastructure Industries, last 2,60% | INR/23:00 |
Federal Open Market Committee Meets to Decide on Rates | USD/23:00 |
The Risk Today
Yann Quelenn
EUR/USD is bouncing further after touching 1.1000. Hourly resistance is given at 1.1387 (20/10/2015 low). Stronger resistance can be found at 1.1561 (26/08/2015 low). Expected to show continued retracement of the pair. Since March 2015, the pair is improving. Key supports can be found at 1.0458 (16/03/2015 low) and 1.0000 (psychological support). The technical structure favours an eventual break higher. Strong resistance is given at 1.1871(12/01/2015).
GBP/USD is rising slowly. Support lies at 1.5202 (13/10/2015 low) and hourly resistance can be found at 1.5529 (18/09/2015 high). A long as prices remain in this range, there is no clear mid-term momentum. Expected increase towards resistance at 1.5529. In the longer term, the technical structure looks like a recovery as long as support given at 1.5089 stands. A full retracement of the 2013-2014 rise is expected.
USD/JPY keeps on declining towards 120.00. Strong resistance is given at 121.75 (28/08/2015 high). Hourly support can be found at 118.07 (15/10/2015 low). Expected consolidation before targeting again resistance at 121.75. A long-term bullish bias is favored as long as the strong support at 115.57 (16/12/2014 low) holds. A gradual rise towards the major resistance at 135.15 (01/02/2002 high) is favored. A key support can be found at 116.18 (24/08/2015 low).
USD/CHF has failed to break resistance at 0.9844 (25/09/2015 high). Hourly support is given at 0.9476 (15/10/2015 low). Further bouncing is expected. In the long-term, the pair has broken resistance at 0.9448 suggesting the end of the downtrend. This reinstates the bullish trend. Key support can be found 0.8986 (30/01/2015 low).
Resistance and Support:
EURUSD | GBPUSD | USDCHF | USDJPY |
1.1714 | 1.593 | 1.024 | 135.15 |
1.1561 | 1.5819 | 0.9903 | 125.86 |
1.1387 | 1.5659 | 0.9844 | 121.75 |
1.1046 | 1.5325 | 0.9835 | 120.46 |
1.0809 | 1.5202 | 0.9476 | 118.07 |
1.0521 | 1.5089 | 0.9384 | 116.18 |
1.0458 | 1.496 | 0.9259 | 115.57 |
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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