FOMC announces stimulus will end in October

The FOMC minutes caused some mixed reactions in the FX markets last night. With a less dovish approach, Janet Yellen announced that QE would likely end this October with a final $15bn reduction of asset purchases. USD gained strength from this not so new information which was made more official for the first time. The dollar couldn’t hold on to its gains, as once again there was no rate guidance from Yellen. So we end up this morning being back at pre-FOMC levels as the market doesn’t have a clear view of how the FOMC is to tackle the low rates. US data out today will include the unemployment claims with an expected 316k from previous 315k.

A data plagued Asian session, caused some moves notably in the Aussie, with the employment change coming in better than expected lifting the Aussie to one week highs, only to fall, once traders noticed that the unemployment data had risen to 6% the highest in a decade.

AUDUSD now trading back below 0.9400 which will be welcome news to the RBA, but not in terms of the growing unemployment.

Japan see a shock drop in its core machine orders down -19.5% from an expected +0.9%, which will cast a shadow over the recent upbeat Japan economy, as for now it seems to have had little affect on the USDJPY as the Yen still holds it gains against the USD trading below 102.00.

Cable is currently trading back around pre FOMC levels at 1.7130, after a choppy day yesterday it seems stuck in between 1.7100 and 1.7200 for now, with a lot of bids below 1.7100 keeping it on its up trend.
The official bank rate is decided today and asset purchases, we don’t expect any surprises here but the MPC statement may hold some clause to an eventual rate rise, and push cable out of its range.

AUD/USD

Supports 0.39370 1.9350 1.9320 | Resistance 0.9410 0.9440 0.9480

USD/JPY

Supports 101.40 101.20 100.75  Resistance 101.85 102.30 102.50

GBP/USD

Supports 1.7100 1.7065 1.6695 Resistance 1.7180 1.7200 1.7230