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There's no doubt that the Fed will hike its funds rate later today. The accompanying FOMC statement and economic projections will be of much more interest. The comittee took a step toward a more neutral bias at their most recent meeting. Should they continue in that direction, the dollar is bound to get sold. EUR/USD is trading in an ever tighter short-term range but any breakout will probably be limited, with ECB decision coming up tomorrow.
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Range trading or a big move today?
A somewhat sedate start to the week, relatively to what we have been witnessing lately. It's President's Day today in the U.S. while China is off for the Spring Festival until Thursday. In recent years, thinner holiday liquidity often led to a sizable move rather than compressed volatility. These are one of the best times to mark prices up or down.
GBP/USD lower after CPI inflation report
U.K. CPI inflation report for December came in solid. Headline was as expected, core missed by a tick, while retail surprised to the upside. GBP/USD was not impressed and spiked about 20 pips to the downside. Sellers have been active since yesterday, but if 1.3740 - 1.3750 area holds, bulls might get one more shot at 1.3835.
USD/JPY falls as BOJ tapers
USD/JPY dropped like a rock as Bank of Japan bought slightly less JGBs than in previous open market operation. Selling already began yesterday though as the pair rejected prices above 113.30. 112 - 112.25 is the support area to watch.
USD/CAD correcting after Friday's spike lower
BOC Business Outlook Survey, released about an hour ago, was upbeat on the economy. Rate hike odds ticked further up. USD/CAD, however, is in the process of correcting Friday's outsized fall. 1.24 is the initial support and 1.245 the resistance.
Cable snaps back, PMIs not helpful
GBP/USD topped out near 1.3610 just before E.U. session commenced. Two weaker than expected PMIs in a row didn't help the pair, which snapped back to 1.35. Possibly also some profit taking ahead of FOMC Minutes in a couple of hours.
Central bank day ends with no big surprises
The central bank day is concluding with European currencies and Canadian dollar pretty much where they started the week. Yen, Australian dollar and New Zealand dollar are the gainers. Next week should be a lively one, before likely some holiday hibernation.
Kiwi welcomes new RBNZ governor
N.Z. PM Jacinda Ardern announced that Adrian Orr will become the new RBNZ governor. Kiwi liked the news, jumped about 50 pips and added another 20 later. The pair appears to have been forming a bottom with CFTC positioning data showing a large net short.
U.S. dollar whipsaws after labour market data release
U.S. jobs & wages report for November looks solid. Payroll figures came in better than expected while average hourly earnings slightly missed estimates. Market reaction was a bit messy but pretty much the usual stuff of taking out both sides before returning to what it was doing before the release.
GBP/USD settles near opening price on a volatile Monday
Quite some volatility for a Monday. Main beneficiary was GBP/USD which thrashed around on "Brexit lunch" headlines. Somewhat toppy price action since Friday may signal a period of consolidation near 1.35. I expect the pair to remain supported ahead of the European Council summit mid-month.