Post FOMC: As you were
City Index January 29, 2015 3:08 PM
<p>The dollar trades with a bid tone following the FOMC which is being perceived as slightly hawkish by most commentators, despite the cautious tone with regards […]</p>
The dollar trades with a bid tone following the FOMC which is being perceived as slightly hawkish by most commentators, despite the cautious tone with regards to the inflation outlook. The committee commented that ‘inflation has declined further below the Committee’s longer-run objective, largely reflecting declines in energy prices’, but with changes to the language from ‘moderate’ to solid in relation the US growth assessment, jobs gains were described as ‘strong’.
The committee also reiterated that the decline in energy price was good for the US economy, adding that the lower cost had ‘boosted household purchasing power’. The muted reaction in Asia has seen the Euro reclaim a 1.12 handle, following the position adjustment squeeze to 1.1425 on Tuesday.
The RBNZ joined the recent dovish Central Bank mantra overnight as the New Zealand Central Bank removed its tightening bias, citing potential drags on growth that include an overvalued New Zealand dollar. The inflation outlook was also described as being negative for a prolonged period. The NZD has subsequently traded 2% lower following the announcement.
The data highlight of today will be the German inflation data at 1pm (UK time), although I suspect the reaction to a weaker number will have less impact following the ECB QE action last Thursday.
Supports 1.1260-1.1200-1.1100 | Resistance 1.1340-1.1370-1.1430
Supports 117.20-116.80-116.50 | Resistance 118.50-118.90-119.30
Supports 1.5080-1.5000-1.4950 | Resistance 1.5235-1.5280-1.5350
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.