USD sell off following NFP data release tapering forecasts delayed to March 2014

So the awaited late arrival of NFP Tuesday came in less than forecast, with the blame on the anticipated US shutdown.  This caused USD to sell off as expected, putting pressure on the FOMC to be able to lift tapering as it was based on data they receive. With this month’s NFPs likely to be affected by the 14-day shutdown, most forecasts of tapering have now been pushed to March 2014. This will be when new Fed chairman Janet Yellen will be in charge, who is known to be a very dovish speaker for the FOMC so it will be interesting to see if her first meeting will be to start the tapering. So for the meantime we are looking at USD weakness to continue with dips.

Overnight we saw some big swings for AUD after the release of the CPI rising more than expected. The market rallied around 50 points but couldn’t keep hold of these gains as it dropped 100 pips from the highs due to the Australian Treasurer Hockey injecting 8.8bn AUD into the RBA. This boosted their currency options to help tackle the increasingly high AUD rate.  The Australian government are also to raise their debt ceiling by 60% so they don’t go down the same route as the US as the debt ceiling is set to be hit in December.

Main data to watch today is from the UK where we see the MPC asset purchase vote and the MPC official bank rate vote. Both are expecting 0-0-9 even with signs of recovery so we don’t expect any members looking to add or taper these.  GBP has had a bit of a fall from the Asian session. This appears to have more to do with the GBP/JPY trade which has fallen 180 pips since the open, based on the JPY rise following on from the weak NFP. The most likely outcome will be that the Fed will not taper this year after coming very close in its September meeting.

EUR/USD

Supports 1.3760 1.3660 1.3515 | Resistance 1.3800 1.3830 1.3870

AUD/USD

Supports 0.9630 0.9600 0.9525  | Resistance 1.9755 0.9792 0.9840

GBP/USD

Supports 1.6115 1.5940 1.5890  | Resistance 1.6250 1.6300 1.6380