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In the Zone
- As the sun shone on Florida yesterday, it seems as though the White House are back to meetings today to try and get tax reform through. I am keeping an eye on the USDJPY, some positive news on this could affect the USDJPY greatly.
Yesterday was all about the rally in the US dollar, it was something that we were expecting as both tensions in North Korea dissipated somewhat and news that hurricane Irma spared large parts of Florida. This meant that both the dollar and US equity market would have rallied, the dollar rally in the dollar is something that we were expecting, today will be an interesting one as the market will dictate if this was just a relief rally or if there is any momentum behind it.
Almost all the major FX pairs find themselves sitting at major support or resistance levels and that is extremely evident in the USDJPY. There was a steady climb to 109.46 yesterday, despite the morning gap. This pair is the most influenced by geopolitical affairs and so this was to be expected after the recent move, we have a lot of strong resistance levels in our path and so I will be watching this pair carefully to see if any sellers start building large offers.
Although the dollar rallied against almost all the other major pairs it is noticeable that the USD move was clearly running out of steam into the close. The GBPUSD closed only 30 pips lower which would suggest the bias is towards the buyers, the EURUSD fell a decent 80 pips but again closed on the daily lows. The AUDUSD closed lower by 25 pips and it was a tough move lower and the USDCAD will be driven by an unpredictable oil price.
We will have to wait for the London open to see what the markets think, but I am cautious this morning as early morning indications are that the move yesterday was a mere relief rally rather than the start of any move.
Keep an eye out for the afternoon video that tries to tie everything together.
Important Economic Data out today
10:30 GBP CPI
Effect: Actual higher than expected is good for the GBP
16:00 USD JOLTS Job Openings
Effect: Actual higher than expected is good for the USD
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