Super dovish FOMC sends USD falling

FOMC minutes stole the show last night after a more dovish than expected minutes sent the USD lower hitting 2 week lows within minutes of the release.

The main points were that the FED fears the market is misreading on rates rising, they are concerned about a strong US dollar and overseas growth, and suggested that no major changes likely in the next FOMC meeting. With all these being super dovish for the USD, we see a rally in the likes of GBP and EUR of 150 points. This showed the positions of traders in the market anticipating an earlier rate rise for the FED and the selloff begins.

Now we could see a weak USD until the next meeting, and more attention on the macro data ahead, with unemployment claims due out from the US today expected to rise to 291k.

Cable has taken full advantage of the recent dovish USD trading as high as 1.6196 today, with the rate announcement and asset purchases out today. No shocks look set to be in store with 0.5% and 375b to remain unchanged.

The euro also very bid after FOMC, but data still coming in weak as German exports plunge by largest amount in 5 ½ years.

Later today ECB President Draghi speaks in Washington about the central bank and the economy, always a volatile time for the euro as more details are looked for.

The Aussie employment came out weaker last night but hasn’t outweighed the weak USD, keeping the Aussie bid now trading below the 0.8900 level.

Japan machine orders are up for a third month, giving the JPY more strength (adding to the weak USD) we now see USDJPY below 108.00. There are still calls from banks that the USDJPY could hit 120, but for now a USD correction is still on-going from the FOMC last night.

EUR/USD

Supports 1.2715 1.2700 1.2685   | Resistance 1.2760 1.2775 1.2860

USD/JPY

Supports 107.70 107.10 106.80     | Resistance 108.45 108.80 109.15

GBP/USD

Supports 1.6165 1.6130 1.6020  | Resistance 1.6180 1.6210 1.6250