Forex today was dominated by broad based US dollar strength, as the dust settled over the Fed aftermath. The USD bulls continued to cheer Fed’s hawkish surprise, leaving most major in the red zone. Meanwhile, the Asian equities traded mixed, tracking the mixed close on the Wall Street overnight, while oil prices stalled its bullish momentum.
Among the FX space, the Antipodeans suffered the most, with the Kiwi having shrugged-off better NZ GDP data, in the wake of looming NZ elections. The USD/JPY pair stuck to post-FOMC gains near mid-112s and paid little attention to the BOJ’s status-quo.
Main topics in Asia
NZ GDP, June 2017 quarter review - Westpac
Analysts at Westpac noted NZ's quarterly change of 0.8% (last: 0.6%, Westpac f/c: 0.8%, mkt f/c: 0.8%).
Goldman Sachs - US Congress likely to approve $1 trillion in tax cuts by next year
Goldman Sachs economist Alec Phillips' says the congress is more likely to approve the tax cuts by next year.
Japan's PM Abe - Now isn't the time for dialogue with North Korea
Comments from Japanese PM Abe crossing the wires via Bloomberg…
BOJ leaves monetary policy unchanged
The Bank of Japan (BOJ) concluded its 2-day monetary policy review meeting and announced no changes to its monetary policy settings, holding rates at -10bps, while maintaining 10yr JGB yield target at 0.00%.
BOJ keeps economic assessment unchanged
Following the BOJ’s unchanged monetary policy stance, the release of the central bank’s monetary policy statement highlights (via Reuters)…
Key Focus ahead
With the key FOMC decision out of the way, attention now turns towards the ECB Chief Draghi’s speech due later tonight for fresh insights on the QE taper plans. Meanwhile, the immediate focus now remains on the BOJ Governor Kuroda’s speech at the presser and RBA Governor Lowe’s speech ahead of the European open. On the data-front, we have nothing of relevance from the EUR and UK docket, except for the ECB bulletin and UK public sector net borrowing data.
The North American session offers the Canadian wholesale sales data, while the US jobless claims and Philly Fed manufacturing index will be also reported.
EUR/USD headed to 1.1830/20 on hawkish Fed surprise?
The EUR/USD pair keeps its offered tone intact in the Asian trades, now consolidating the extensive sell-off fuelled by a hawkish surprise delivered by the Fed overnight, as attention gradually turns towards the ECB President Draghi’s due later tonight.
GBP/USD - Yield differential still favors GBP, Fed-led exhaustion to be short lived?
GBP/USD dropped to a low of 1.3452 after Fed gave dollar bulls something to lean on. The currency pair traded on the backfoot Asia around 1.3480 levels. However, the Fed-led exhaustion in the GBP/USD could be short lived, as the bond yield differential still favors GBP.
Daily Forex Outlook: What you need to know for Thursday
It was all about the US Dollar on Wednesday, as the FOMC telegraphed, and the market agreed to buy into, that another rate hike is likely in December.
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