Market Brief
The US dollar came sharply in demand amid the Fed indicated a first increase in interest rates by mid-2015. The monthly bond purchases have been reduced by additional USD 10bn to USD 55bn. The unexpected hawkish tone out of Yellen's first FOMC meeting sent the US 10-year government yields to 2.7916%; DXY hit 80.111 for first time since two weeks.
In Japan, the MoF data showed that foreign investors sold Yen 1.09trln worth Japanese stocks; this has been the highest amount on record. USDJPY rallied to 102.68 in New York and consolidated gains above 102.20 (Fibo 38.2% lvl on Oct'13 – Jan'14 rally). The MACD (12, 26) will turn positive for a daily close above 102.65. If Fed sticks to its hawkish view, USDJPY should get back on its ascending trend towards 105.00. Option barriers with today expiry are seen at 102.75/85 and 103.00. Stops are eyed above.
EURUSD dived to 1.3810 post-FOMC. The sell-off squeezed the technical indicators, EURUSD currently trades below Feb-Mar uptrend channel base (1.3840). The MACD (12, 26) flattened and will step in the red zone for a daily close below 1.3875.
On a similar pattern, the Cable aggressively sold-off to 1.6508. The supportive jobs data and hawkish BoE expectations were offset by FOMC news. GBPUSD couldn't make it: the bearish momentum gained paced, the former 50-dma support (currently at 1.6560) has now turned intra-day resistance. Option barriers are seen at 1.6600, the bets below are mixed with short bias. GBPUSD now tests the July-March uptrend channel bottom (1.6510). We see room for further downside correction.
The FOMC hit the AUDUSD recovery. After having tested the 200-dma (currently at 0.9144), AUDUSD sold-off to 0.9002 on broad based USD strength. The technicals flattened. Now that the knee-jerk reaction is over, selling pressures are suspected to fade. Corrective bids are seen at 0.9012/27 (21 & 100 dma) region.
USDCHF rallied to 0.8830 for the first time in two weeks and consolidated gains above 0.8800 in Asia. Released in the morning, the trade surplus increased from CHF 2.59B to 2.62B in February despite fading exports. The SNB is widely expected to keep its 3-month libor target unchanged at 0.00% at today's meeting. However, the Swiss franc remains subject to safe haven inflows given the ongoing tensions between Ukraine and Russia.
The economic calendar consists of German February PPI m/m & y/y, Swiss February Trade Balance, Exports and Imports m/m, SNB decision on 3-month libor target, Italian January Current Account Balance, UK March CBO Trends Total Orders and Selling Prices, US March 15th Initial Jobless Claims & March 8th Continuing Claims, US March Philadelphia Fed Business Outlook, US February Existing Home Sales m/m and US February Leading Index.
The US dollar came sharply in demand amid the Fed indicated a first increase in interest rates by mid-2015. The monthly bond purchases have been reduced by additional USD 10bn to USD 55bn. The unexpected hawkish tone out of Yellen's first FOMC meeting sent the US 10-year government yields to 2.7916%; DXY hit 80.111 for first time since two weeks.
In Japan, the MoF data showed that foreign investors sold Yen 1.09trln worth Japanese stocks; this has been the highest amount on record. USDJPY rallied to 102.68 in New York and consolidated gains above 102.20 (Fibo 38.2% lvl on Oct'13 – Jan'14 rally). The MACD (12, 26) will turn positive for a daily close above 102.65. If Fed sticks to its hawkish view, USDJPY should get back on its ascending trend towards 105.00. Option barriers with today expiry are seen at 102.75/85 and 103.00. Stops are eyed above.
EURUSD dived to 1.3810 post-FOMC. The sell-off squeezed the technical indicators, EURUSD currently trades below Feb-Mar uptrend channel base (1.3840). The MACD (12, 26) flattened and will step in the red zone for a daily close below 1.3875.
On a similar pattern, the Cable aggressively sold-off to 1.6508. The supportive jobs data and hawkish BoE expectations were offset by FOMC news. GBPUSD couldn't make it: the bearish momentum gained paced, the former 50-dma support (currently at 1.6560) has now turned intra-day resistance. Option barriers are seen at 1.6600, the bets below are mixed with short bias. GBPUSD now tests the July-March uptrend channel bottom (1.6510). We see room for further downside correction.
The FOMC hit the AUDUSD recovery. After having tested the 200-dma (currently at 0.9144), AUDUSD sold-off to 0.9002 on broad based USD strength. The technicals flattened. Now that the knee-jerk reaction is over, selling pressures are suspected to fade. Corrective bids are seen at 0.9012/27 (21 & 100 dma) region.
USDCHF rallied to 0.8830 for the first time in two weeks and consolidated gains above 0.8800 in Asia. Released in the morning, the trade surplus increased from CHF 2.59B to 2.62B in February despite fading exports. The SNB is widely expected to keep its 3-month libor target unchanged at 0.00% at today's meeting. However, the Swiss franc remains subject to safe haven inflows given the ongoing tensions between Ukraine and Russia.
The economic calendar consists of German February PPI m/m & y/y, Swiss February Trade Balance, Exports and Imports m/m, SNB decision on 3-month libor target, Italian January Current Account Balance, UK March CBO Trends Total Orders and Selling Prices, US March 15th Initial Jobless Claims & March 8th Continuing Claims, US March Philadelphia Fed Business Outlook, US February Existing Home Sales m/m and US February Leading Index.
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