Will the FOMC change the tone?

<p>The short-term US dollar long positioning was cleansed yesterday afternoon ahead of the FOMC this evening, which is being billed as one of the most […]</p>

The short-term US dollar long positioning was cleansed yesterday afternoon ahead of the FOMC this evening, which is being billed as one of the most significant policy meetings in recent times as the markets look for signs that the Federal Reserve are about to engage in the eventual ‘lift off’ of interest rates.

There were two events yesterday afternoon that sparked the dollar sell off: the PBOC announced that they would inject 500 billion Yuan of liquidity into the lending facility operations of China’s five biggest banks in a move to counter a rapid slowdown in the domestic economy; and WSJ journalist and touted FED watcher, Jon Hilsenrath, suggested that the FOMC will keep the all important ‘considerable time’ phrase in tonight’s statement with regards to short-term rates. This is despite a report from the Sanfrancisco Fed earlier in the month that suggested the markets are under-pricing rates hikes in the US.

USD/JPY trades firmly back on the 107 handle this morning following the brief dip below yesterday after the above events and there are reports in the Nikkei today that Japan will downgrade the economy in the Cabinet Office Monthly Economic report, which is due this Friday.

The latest Scottish independence polls released overnight caused further volatility to the proud pound as ICM originally reported a 52% outcome for the ‘yes’ campaign only to correct it to ‘no’ a few minutes later as polls from Opinium and Survation reflected the exact same outcome of 52% for the no vote.

The focus today will no doubt be the FOMC this evening, but ahead of that we also have important data in the form of the UK employment data, along with the BoE minutes as Europe and the US release the latest inflation data.

 

EUR/USD

Supports 1.2900-1.2855-1.2755  | Resistance 1.3005-1.3040-1.3080

 

USD/JPY

Supports 106.90-106.55-106.00  Resistance 107.40-107.80-108.00

 



GBP/USD

Supports 1.6275-1.6215-1.6140  Resistance 1.6345-1.6410-1.6500

 

 

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