Yields Fall and the Dollar Slips After Fed Minutes, Stocks Rise
US Yields fell while the Dollar slipped against its Rivals after the FOMC Meeting minutes. Fed officials agreed that a plan to gradually shrink their US$4.5 trillion balance sheet should be announced soon. The statement pointed to a hike as soon as their June meeting. However, markets questioned a September move if economic data continues mixed and there is no pick-up in inflation.
US April Existing Home Sales fell to 5.756 million units from 5.70 million the previous month.
Moody’s downgraded China’s credit rating yesterday citing concern on Chinese debt.
The Dollar Index (USD/DXY) slipped to finish at 97.055, down 0.3 % from 97.39 yesterday.
The Canadian Dollar soared against its US counterpart. The “Loonie” took off after the Bank of Canada kept rates unchanged at 0.5% but was more upbeat on the economy. Latest CFTC/Reuters data revealed net speculative short Canadian Dollar contracts were at highs not seen since 2008.
GBP/USD Daily Outlook
GBP/USD is still bounded in range trading below 1.3047 and intraday bias remains neutral. As long as 1.2844 minor support holds, further rise remains mildly in favor. Nonetheless, as we are still viewing price actions from 1.1946 as a corrective move, we'd expect upside to be limited below 1.3444 resistance to
bring near term reversal. On the downside, break of 1.2844 will indicate short term topping and turn bias back to the downside for 1.2614 resistance turned support first.
In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There are signs of reversal, like breaking of 55 week EMA, weekly MACD turned positive, and monthly MACD crossed above the signal line. But still, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish for extend the down trend through 1.1946
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