April Fools

The buy dollars wear diamonds theme is back in the FX market this morning, as the Fed provided some subtle changes in the statement whilst the dot plot suggested a slower transition to rate rises.

The Janet Yellen press conference has been deemed as hawkish as again the Fed Chair has given a time scale to a new reference, much like she did earlier in the year when describing ‘considerable time’ as a  six-month period, with the new ‘patience’ language described as ‘a couple of meetings’, adding of course that every policy decision is data-dependent.

The overall tone has given me the view that the Fed are in no hurry to raise rates, as flexibility has been given as the ‘considerable time’ language has been replaced with ‘patience’ in describing rate increases. The forward guidance change is being likened to the language change of 2004.

The SNB has surprised the markets this morning by introducing negative rates, with the below hitting the wires catching a few lethargic traders on the hop in early European trading by moving the deposit rate to -0.25%.

This may be coincidental but the detail reveals the move to negative deposit rates is effective from the 22nd of January, which is the same day as the next ECB meeting which may raise the market expectation of further QE measures from the ECB.

*SNB INTRODUCES NEGATIVE INTEREST RATE OF -0.25%

*SNB SAYS LIBOR TARGET RANGE IS -0.75% TO 0.25%

*SWISS FRANC WEAKENS 0.3% VERSUS EURO TO 1.20402

*SNB REAFFIRMS MINIMUM EXCHANGE RATE FOR FRANC

The data today from across the pond this afternoon is of a secondary tier with the weekly jobless claim count, along with Philadelphia Fed business survey complete with leading indicators.

EUR/USD

Supports 1.2245-1.2230-1.2100  | Resistance 1.2350-1.2400-1.2445

USD/JPY

Supports 118.00-117.50-116.25    | Resistance 119.00-119.45-119.90

GBP/USD

Supports 1.5540-1.5500-1.5430  | Resistance  1.5685-1.5740-1.5820