The FOMC are set to announce the FED rate tonight and the fate of QE. This will no doubt be the only data of interest today.
What is expected tonight is the end of QE3- the final cut of 10 billion USD. This is the most likely outcome, but we have been surprised before so one has to be very cautious., with comments from FEDs Bullard a non-voter suggested that maybe the FED should only cut 5 billion as the inflation is seen to be worryingly low still. This will be a shock to the market and possibly damaging to the USD.
‘Considerable time’ are the key words that are expected to be used for the rates, which looks to continue to be used due to lack of inflation.
Last month the outcome was positive for the USD. Yellen noted that there may be a steeper rate hike path, so there’s lots to wade through in the wording; normally a very volatile time for all pairs in the FX world.
Overnight, Asian currencies have had the more positive moves with YEN, AUD and NZD moving higher, with an increase in Japanese industrial production up to 2.7% helping the YEN advance, and Kiwi business confidence gaining in a post-election bounce.
Euro and GBP keeping their gains against the green back for the past few days as the FOMC weighs on the dollar and a weaker durable goods data out of the US yesterday.
Supports 1.2710 12650 1.2610 | Resistance 1.2765 1.2785 1.2850
Supports 107.60 107.10 106.75 | Resistance 108.20 108.40 108.75
Supports 1.6085 1.6065 1.6030 | Resistance 1.6150 1.6185 1.6225
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