EUR/USD stays resilient ahead of Fed decision

KBC Market Research Desk KBC Bank

EUR/USD maintained a cautious upward yesterday. The move had only a loose link with price action in core bond and equity markets. A strong ZEW maybe was slightly euro supportive. Later, the EUR/USD rebound accelerated on headlines that the US considers delaying the December 15 deadline to impose additional tariffs on Chinese goods. The pair closed at 1.1092. EUR/JPY and USD/JPY also succeeded an intraday uptick even as (US) equities struggled. USD/JPY finished at 108.72.

This morning, Asian equities opened mostly negative, but gradually improved. A report signalled an overshoot in the Japan budget deficit to be covered by more bond sales. The news is mixed, maybe even a tentative positive for the yen. USD/JPY hovers near 108.75. EUR/USD is running into resistance as the 1.11 resistance is again with reach. The kiwi dollar eases after the recent rebound. The government cut the 2019/20 growth forecast to 2.3% but announced further fiscal stimulus.
Today's, US CPI is expected at 2.0% (from 1.8%). The core is expected unchanged at 2.3%. The dollar probably needs a big surprise as markets mainly watch the PCE deflators. Later, the Fed will likely confirm a pause after cutting rates three times. Powell will probably repeat that the economy is in a good place. Any focus on the symmetric inflation target might be a tentative USD negative. Even so, the FOMC communication probably won't be key for the dollar. The focus is on other event risks (ECB, tariffs, UK election). The outcome of the UK election and the trade talks remains binary in nature. We still see as slightly bigger chance for a euro supportive rather than a USD supportive outcome.
EUR/USD eased off the 1.11 after last week's US payrolls EUR/USD soon found its composure. The EUR/USD 1.0989/81 area looks quite solid support. The jury is still out, but we slightly prefer to sell the USD on upticks, against the euro and the yen.

Sterling held strong yesterday with EUR/GBP again drifting close to the 0.84 barrier. Overnight, a new You Gov poll caused some renewed uncertainty as it predicted a smaller Conservative majority (28 vs 68 two weeks ago). EUR/GBP returned back higher to the mid 0.84 area. Healdlines on the election will continu to guide intraday sterling trading, but we don't expect a big sterling correction before the publication of the election result.

Download The Full Sunrise Market Commentary Currencies

Author

KBC Market Research Desk

KBC Bank

EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold clings to gains just above $5,000/oz

Gold is reclaiming part of the ground lost on Wednesday’s marked decline, as bargain-hunters keep piling up and lifting prices past the key $5,000 per troy ounce. The precious metal’s move higher is also underpinned by the slight pullback in the US Dollar and declining US Treasury yields across the curve.

Crypto Today: Bitcoin, Ethereum, XRP in choppy price action, weighed down by falling institutional interest

Bitcoin's upside remains largely constrained amid weak technicals and declining institutional interest. Ethereum trades sideways above $1,900 support with the upside capped below $2,000 amid ETF outflows.

Week ahead – Data blitz, Fed Minutes and RBNZ decision in the spotlight

US GDP and PCE inflation are main highlights, plus the Fed minutes. UK and Japan have busy calendars too with focus on CPI. Flash PMIs for February will also be doing the rounds. RBNZ meets, is unlikely to follow RBA’s hawkish path.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.