USD/JPY rips higher ahead of the FOMC

Plenty of volatility in the FX markets ahead of the FOMC tonight, led by USD/JPY initially as stimulus talk overnight saw the pair rip higher. Much has been made of the size of the package on offer, and early week disappointment was reversed on reports that PM Abe spoke of an amount closer to Y28trln. Trading back into the mid 106.00’s, sellers emerged to stem the move, and after falling into the mid 105.00’s, we have been eyeing 106.00, but for the stock market weakness late on. This was exacerbated by the surprise build reported in the DoE energy report, which also showed a modest rise in production. Forecasts of a 2.25mln brl draw were met with a 1.67mln build sending the WTI recovery through $43.0 into a tailspin. USD/CAD responded in kind, though only after a modest extension through the session lows just under 1.3160. This was led by a large 4.0% drop in US durable goods orders, while pending home sales also disappointed on the month. Back through 1.3200, we are eyeing 1.3250 resistance once again. GBP continues to defy the weak data – Q2 GDP came in at a better than expected +0.6%, but given the pre Brexit calculations, was of limited relevance, with the CBI reported sales showing notable weakness to send Cable through 1.3100. The move was short lived however, and we are back in the familiar 1.3100’s again. EUR/GBP cannot break out of the .8300’s accordingly. AUD is now camped in the mid .7400’s, but NZD faring a little better in the mid .7000’s.