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In the Zone
A second day of testimony by Fed Chair Yellen went off a little smoother compared to Wednesday, the market idled through. I mentioned yesterday that I am not sure why the market was disappointed on Wednesday, yesterday she was asked about the unwinding of the balance sheet and she was hesitant to give anything away – we can be assured that it will occur this year and in an orderly fashion.
Both the EURUSD and USDJPY were virtually unchanged on the day, there was a bit of choppy trade action as the dollar desperately tries to make some inroads against the major pairs. There is some life in dollar index building and through the Feds message this week that inflation is now again a concern (last week it wasn’t), both the CPI and retail sales data take on a more important role today.
Oddly enough, most of the moves were in the Asia Pacific session yesterday, and the GBPUSD was one of those. This is a pair that I have been hesitant to trade and yesterday showed why, the pair had an attempt on three occasions to break the upper trend line and all three attempts failed. The cable waits on the BOE which has been unpredictable of late but I would feel more comfortable looking at levels closer to 1.3050.
The USDCAD as expected endured an early morning bounce, after such a big move lower of late this would have been expected. I highlighted 1.2770 as the first level to watch and then after 1.2820 as signs that the buyers were in control. Yesterday, we immediately found resistance at 1.2770 and we now found ourselves at 1.2730. That is still 50 pips better than the Wednesday low, today the buyers may attempt 1.2820 again.
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