MPC ECB looking for forward guidance

The Fed has maintained its pace of bond purchases and mentioned a risk of disinflation, causing a dovish tone to the USD after a strong GDP figure was released earlier in the day. This  has caused USD to rally on tapering speculations, but for now we are back to square one with strong data but a dovish outlook and no new guidance from the Fed.

In the Asian session we see some strong Chinese PMI data staying above the 50 mark and China pledging to keep growth within a ‘reasonable zone’. This normally would have helped the Aussie but as we see, it still is in the downward trend, touching a 3-year low as bets on the RBA cutting rates soon outweighs Chinese data.  Australian manufacturing slumps as the currency fall so far is insufficient, adding even more pressure on the AUD.

In today’s data we have EU and UK manufacturing PMI, both expected to be above 50.  Then we have the UK bank rate, with a statement all looking for guidance and clarity due to the bank rate and the stock of asset purchases.

The ECB is due to announce the rate, followed by a press conference where, just as with the MPC, we are looking for further guidance keeping interest rates low for an extended period. Further precision regarding the time frame or reaction function would be welcome.

ISM manufacturing finishes off the day with an expected 52.1 from a previous 50.9 so. More strong data is set to come out of the US – all adding up to possible Fed tapering.

EUR/USD

Supports 1.3250-1.3230-1.3210 | Resistance 1.3340-1.3410-1.3445

USD/JPY

Supports 97.50-96.95  | Resistance 98.55-98.80-99.30

GBP/USD

Supports 1.5125-1.5090-1.5050 | Resistance 1.5250-1.5295-1.5335