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U.S. Update: Waiting for the FOMC

Wed, Nov 4 2009, 15:38 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team


What happened


Since gold break previous historical high last Tuesday, risk appetite remains in good shape across the board. The metal reached a $ 1095/oz high early Europe, supporting dollar and yen loses across the board.

Pound rose strongly after an improvement in Services PMI that rose to 56.9 above expectations, sending GBP/USD to an intraday high of 1.6540, where the pair consolidate till U.S. opening.

Despite U.S. data failed to accomplish previous month readings , as both ADP and ISM Services PMI come under expectations, American indexes are rallying early Wednesday as investors eyed higher commodity prices and stronger overseas markets, as well as a pair of labor market reports that implied the pace of layoffs is slowing.

Pound broke higher reaching the 1.6560 level, while EUR/USD quotes around 1.4830 after breaking 1.4810 strong resistance level. Both pairs remain strongly bullish ahead of FOMC decision later in the day.

What to expect


For the next hours, majors should consolidate around current levels, ahead of FED statement, issued around 2pm EST Wednesday; market don’t expect any change in the current rate, yet no doubts investors will be watching for any change in the “extremely low, for an extended period” language the US central bank has been using for the last months regarding rates.

A dovish,  unchanged statement, will likely keep dollar under strong selling pressure, while a change in the terms of how long will they took to rise rates back, will be a double blade knife: whether if market decides to favor more rise in stocks, and send dollar lower, or finally support dollar gains, something quite unlikely at this point, is something that we will just need to wait to see.

Published on  Wed, Nov 4 2009, 15:40 GMT


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