FX in a ‘patient’ consolidation mode

<p>The FX markets are trading with reduced volatility ahead of the FOMC meeting tomorrow despite oil reaching a fresh 9-year low yesterday. The euro has […]</p>

The FX markets are trading with reduced volatility ahead of the FOMC meeting tomorrow despite oil reaching a fresh 9-year low yesterday. The euro has traded back above 1.06 this morning with sources suggesting that position adjustment to what technically looks to be an oversold euro provided the catalyst for the early move.

The BoJ kept monetary policy unchanged with a majority voting pattern of 8-1 as monetary stimulus levels remained at 80 trillion JPY. The only change came in the form of the inflation outlook as the BoJ revised the current view to zero from 0.5% despite their expectations that the longer-term view is rising. Going forward, the BoJ is likely to expand the monetary policy at the October 30th meeting, when it updates its outlook and the effects of fiscal stimulus are likely to fade.

The RBA minutes caused an initial 25 point dip to the Australian dollar as the central bank again reiterated its stance on their currency with ‘AUD above fundamental value given commodity falls’ as the statement kept to the ‘wait and see’ policy as members ‘saw advantages in receiving more data to indicate whether or not the economy was on the previously forecast path’ adding ‘case to ease policy further might emerge’.

We receive the latest HICP reading from the EU this morning along with the ZEW survey, although the significance of this data is less important as we await the effect of QE. US housing data is released this afternoon ahead of the FOMC tomorrow where all eyes will be on the ‘patient’ phrase and if it is removed from the forward guidance statement.

 

 

EUR/USD
Supports
 1.0435-1.0340-1.0285 | Resistance 1.0665-1.0825-1.0990

 

 

USD/JPY
Supports  
119.50-118.65-116.70 | Resistance 122.45-123.70-124.15

 

 

GBP/USD
Supports
 1.4550-1.4350-1.4250 | Resistance 1.5100-1.5250-1.5345

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