Stephen Innes
SPI Asset Management
The Fed has articulated its concerns about the low level of inflation in the US; which lessens the likelihood of a December rate hike. The US dollar then dropped against the other major currencies in a lively afternoon New York session on Wednesday.
As expected, The Feds tipped their hat to the widely telegraphed September balance sheet reduction timing, but it was the subtle downgrade in inflation language which the markets pounced on leaving the December rate hike camp perched precariously. But realistically, after four consecutive misses on US CPI, the writing was on the wall.
Now traders are left mulling over how to deal with the greenback going forward knowing there’s a lot of important data to deal with between now and December. Some are resisting the temptation to not to over react to a Fed that was not supposed to be this dovish, but this price action is too hard to ignore.
EURO
The Euro sprang to life taking out the key 1.0715 Euro’s strength continues to be the market focus, and while we’ve stalled out a bit in Asia unless there’s some re-inflationary signal from Friday’s GDP/PCE, it’s hard to envision any support for the greenback near term. Which would suggest the path of least resistance is higher EURUSD From the 1.4 move, down to 1.0341). Where to from here?
G-10 Complex
Everything else has reacted as expected with the both the KIWI and Aussie taking flight
Outside for the FOMC
The US Senate vote to repeal Obamacare failed. So back to headline watching to see whats next.
WTI nearly hit $49.0 on the back of inventory data providing an underpin to the commodity complex.
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