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19 September 2017- Dean Forex Market Commentary

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Dean's Daily FX Update – 19 September 2017

In the Zone

  • USDJPY
  • USDZAR
  • Oil

Noteworthy News

  • The UK are already starting to negotiate trade deals ahead of Brexit, an entire generation has allowed the EU to negotiate on the UK’s behalf and we may see countries trying to take advantage of the UK.

Recap

Ahead of a much anticipated Fed meeting on Wednesday, the market had shifted its attention to a scheduled statement by BOE Governor Carney yesterday. The BOE were in an extremely hawkish mood last week which was the catalyst for the big cable move yesterday, although the BOE have practically guaranteed a hike next week, Carney has a reputation for the being unreliable and so the market was on alert.

Carney in my opinion was almost reluctant to confirm the hike, something that I don’t think the market has completely bought. His reasons for the hike were because of Brexit being inflationary and also because others were doing it – I know, it sounds a little childish to me too. Either way the GBPUSD traded to as low as 1.3465 last night before we saw some bid building and the pair to trade as high as 1.3495 again. I wouldn’t be surprised if this pair targets 1.3600 again this morning.

The USDCAD was a very interesting pair yesterday, with news that the UK and Canada will be entering trade negotiations the pair should have been in a strong CAD move. Instead the BOC went to great lengths to jawbone the pair lower which overshadowed those comments and the pair traded to as high as 1.2330, I suspect that sellers may build offers around that level but that after the Fed, this pair could run somewhat further.

I am keeping an eye on the USDJPY, yesterday the talk was all about higher risk appetite and yield differentials which led the pair to trade to as high as 111.60. There is still some leeway for this pair to trade higher, technically the 61.8% fib at 112.00 should be first resistance but this week is a big one considering that we have both the Fed and the BOJ meetings later in the week. This could be a big trade later on in the week.

Important Economic Data out today

14:30                                     USD                                       Building Permits

Consensus:                         1.22M

Effect:                                   Actual higher than expected is good for the USD

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