US data under scrutiny ahead of FOMC statement

<p>The US dollar has a slight bid bias going into the European open as the market adjusts positioning going into a busy US data session. […]</p>

The US dollar has a slight bid bias going into the European open as the market adjusts positioning going into a busy US data session. Month end rebalancing is also likely to play a dominant role in proceedings. The large investment houses seem to be pointing to the rebalancing flow being dollar negative across the G10 currency space following global equity markets reversing their declines of June along with bond markets. The outperformance of the US market is possibly leaving asset managers under hedged dollars.

Today is looking a lot more eventful, with EU HICP readings and the unemployment rate released at 10am. The US session brings us the ADP report, Q2 GDP and Chicago PMI data, followed by the FOMC statement at 7pm.

The market has revised down its US GDP forecasts in recent weeks following a slew of weaker US data. The consensus is looking for 1%. The July FOMC meeting has no post press conference so the market will be scrutinising the statement for any timing on QE tapering. The understanding is that Bernanke will already have seen the GDP data, ISM number, jobless claims and manufacturing sectors contribution to Friday’s NFP data.

The market will also be looking for any change in the Fed’s remit in the FOMC statement this evening with regards to the Hilsenrath article last week that suggested the Fed may lower its unemployment target to offset the fall in the participation rate in the US labour market.


EUR/USD

Supports 1.3220-1.3195-1.3160 | Resistance 1.3300-1.3340-1.3380


USD/JPY

Supports 97.50-96.95-96.30  | Resistance 98.20-98.80-99.30


GBP/USD

Supports 1.5150-1.5065-1.5020 | Resistance 1.5255-1.5300-1.5340

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (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.

For further details see our full non-independent research disclaimer and quarterly summary.