Markets are waiting for FOMC tomorrow and Yellen’ speech to predict how monetary policy and interest rates will be for the coming year
The Kiwi starred, soaring after the New Zealand government announced the central bank’s new head. Adrian Orr, the successful CEO of New Zealand’s Sovereign Wealth Fund will head the RBNZ, taking away any uncertainty in policy.
In more subdued trading, Dollar Index (USD/DXY) ended little-changed, with mixed results against its Rivals.
US JOLTS Job Openings for November missed expectations, decreasing from the previous month.
Wall Street stocks finished higher. The S&P 500 added 0.40%, closing at a fresh record high.
The yield on the US Ten-year treasury rose one basis point to 2.38%. The UK Ten Year Gilt yield fell to 1.20% from 1.28%. Australia’s Ten Year bond yield climbed 3 basis points to 2.55%.
Expectations are pretty much in place for the central bank outcomes in their final updates for 2017. It’s all about the commentary following the meetings. Markets will turn their attention to the banks’ outlook for inflation, and the global economy’s health. A Fed rate hike is 98% priced in. Janet Yellen’s will have her final news conference on Wednesday following the decision. Low inflation following Friday’s tepid wage numbers may impact the number of Fed rate hikes planned in 2018. And this would impact the US Dollar.
Don’t forget the politics. In the US tax reform is still being worked out. Progress (or lack of it) on Brexit talks will continue to be Sterling’s main driver.
Market positioning remains a driver and is different for each main currency.
Dollar Index (USD/DXY) closed at 93.93 after trading to an overnight high of 93.983. Immediate resistance lies at 94.00 and 94.20. Immediate support can be found at 93.60 and 93.40.
EUR/USD – Lackluster trade due to a lack of catalyst. The Euro traded to an overnight high of 1.1812 before drifting to end little-changed at 1.1775. However, Euro’s base is climbing with the overnight low at 1.17613. Immediate support lies at 1.1760 with 1.1730/40 more crucial support. Immediate resistance can be found at 1.1785 and 1.1800. The ECB’s policy meeting on Thursday is not expected to see any changes. The ECB press conference following the meeting will be closely monitored, as always. Likely range today 1.1760-1.1810. Look to play the range today but keep in mind that the speculative community is still long Euro bets.
GBP/USD – Brexit talks continued to driver Sterling lower with the UK wavering on agreements made last week. Trading in the Pound was choppy last night with the low recorded at 1.3330, which is today’s immediate support. The next support is 1.3300, a break of which could see 1.3250. UK Gilt prices rose and yields plummeted. The yield on the UK Ten year gilt fell to 1.20% from 1.28%. The Bank of England is not expected to make any policy changes. Likely range today 1.3320-1.3390.
AUD/USD – held the 0.75 cent level well, rallying to a high of 0.7545. Immediate resistance lies at 0.7550/60 which should cap any Aussie rallies prior to tomorrow’s Fed meeting. Immediate support can be found at 0.7520 and 0.7500. While Gold and Silver fell yesterday, base metal prices were steady. The Aussie also got a boost from the Kiwi’s performance. Australian House Price Index and NAB’s Business Confidence Index for November are due for release later. The speculative market community is currently long of Aussie bets, but not to an extreme. Likely trading range today 0.7510/50. Just Trade The Range Shag.
NZD/USD – soared after the New Zealand government announced that it chose Adrian Orr as the next RBNZ chief. Orr was an internal candidate and has had central banking experience. Orr also has an international experience where he spent 10 years as the CEO of the New Zealand Super Fund, a successful sovereign wealth fund. The risk premium over the uncertainty as to who would head the central bank has been removed. As well as a few Kiwi shorts. NZD/USD has immediate resistance at 0.6920/30 (overnight high 0.6930). Immediate support can be found at 0.6900 and then 0.6880. Likely range today 0.6900-50. Prefer to buy dips to 0.6900.
USD/JPY – sidelined with an overnight trading range of 113.24 to 113.69. The Fed meeting outcome will dictate USD/JPY. Immediate resistance lies at 113.70 with immediate support at 113.20. In the JPY, it’s useful to note that net speculative JPY shorts (currently -JPY 114,267) are at multi-year highs. Likely range 113.20-113.70. Look to sell rallies.
Now is your chance to make a profit!
Open an account here!
***Information contained in this newsletter are gathered from third parties and should not be regarded in any way as trade advice or recommendations by CM Trading. CM Trading does not recommend or advise traders or investors in their decision making but merely provides information from the market for its clients as additional information is made available as per the events occurring in the financial markets.
HIGH RISK WARNING:
Trading Foreign Exchange (Forex) and Contracts for Differences (CFD’s) is highly speculative, carries a high level of risk and may not be suitable for all investors. You may sustain a loss of some or all of your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin.
© Copyright 2015 – CM Trading – All rights reserved