In the 24 hours following the FOMC statement and Yellen’s speech, the global market went on a roller-coaster ride. The USD Index once plummeted from 100 to 94.88, but now it has recovered most of its loss standing above 99. The Euro recorded a 15-year best performance but could not maintain it for long. On the side, oil prices jumped up 6% and then fell by 4% yesterday as the output cut is still far from sight.
It seemed to be a bull’s trap for EURUSD with many stop orders triggering a surprising rally to 1.10. The FOMC committee downgraded their forecasts of US GDP growth and inflation, which does affect the market expectation. However, the fundamental aspect of theEuro has not been changed yet. Greece debt talks are still on a rocky road and the QE program is set to continue until 2016. Euro Dollar is still in the bearish channel and probably won’t stand beyond the 1.10 level in the short run.
The Dollar Yen once touched 119.20 but rebounded shortly after. Technically, the breakout of a triangle pattern has been confirmed as effective, therefore the bullish view remains in the intermediate term. The pair now is approaching the 121 integer level which is also the upper boundary of the recent downward trend. If USDJPY can stand beyond this level, it may challenge 121.80 again.
Looking to stock markets, the Shanghai Composite gained 0.13% to 3582. The Nikkei Stock Average lost 0.35%. The Australian ASX 200 surged 1.86% to 5951. In European markets, the UK FTSE climbed 0.25%, the German DAX retreated 0.2% and the French CAC Index gained 0.1%. The US stock indices fell after the rally yesterday on Fed’s dovish statement. The S&P 500 closed 0.49% lower at 2089. The Dow slid 0.65% to 18076, and the Nasdaq Composite Index climbed 0.2% to 4992.
On the data front, Canada CPI and retail sales will be released at 23:30 AEDST.
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