Fed drop ‘patience’ but remains dovish and traders drop the US dollar
City Index March 19, 2015 1:42 PM
<p>Yesterday saw an explosive evening session for FX traders, as the volatility over the FOMC didn’t disappoint. The market was kind of expecting a drop […]</p>
Yesterday saw an explosive evening session for FX traders, as the volatility over the FOMC didn’t disappoint. The market was kind of expecting a drop of the ‘patient’ wording, which should have given the USD bulls what they wanted to hear, but not today with a dovish tone still prevalent and a ‘wait and see’ approach to the jobs market and inflation. The dollar went into a serve sell mode.
We saw the likes of GBP/USD and EUR/USD rally as much as 500 points throughout the evening, causing all sorts of chaos. However, not all of this is down to the Fed as a rumour hit late on that an algo malfunction was seen to be adding the USD sell.
Overnight and this morning we have seen some large corrections from the highs of 1.09 in the Asian session in the EUR/USD and 1.50 from the GBP/USD and USD/JPY up from 119.70.
The SNB rate announcement has turned out to be a non-event, with rates on hold which was expected at -0.75% and a mention of staying active in the FX markets which has caused a drop in USD/CHF of around 80 points.
Being flagged as an important piece of data today to watch for is the ECB’s targeted LTRO (long-term refinancing option) expected to drop to 40 b from 129.8b.
US unemployment claims to be released later today expected to rise to 295k from 289k and Philly FED manufacturing is set to rise to 7.2 from 5.2.
Supports 1.0615-1.0360-1.0150 | Resistance 1.1075-1.1290-1.1540
Supports 119.10-118.15-117.00 | Resistance 121.25-122.40-123.40
Supports 1.4690-1.4390-1.4150 | Resistance 1.5220-1.5460-1.5750
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.