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Dean's Daily FX Update – 22 September 2017
In the Zone
- GBPUSD
- USDJPY
- USDZAR
- Oil
Noteworthy News
- The US has really started to turn the screw on North Korea, don’t be surprised if there is a missile test this weekend. Leads me to not have any open positions leading into next week.
Recap
The market was all hands on deck yesterday, after the announcement yesterday that the Fed would start reducing the balance sheet – the market seemed to be hesitant about these statements and will probably look to hear what comes out of the talking heads next week. We highlighted that the market seemed braced to unwind those dollar moves yesterday and in many of the pairs and that is what we got. The catalyst for that move came out of the UK where PM May commented that the UK were willing to pay EUR 20 bln during transition, but wanted access to the single market and the customs union. In what can only be described as gentle sparring up to now, that sounded like the first shot of the Brexit negotiation to me – either way, this led both the GBP and the EUR to trade stronger.
The leader of North Korea has become known as “Rocket Man” recently and yesterday we saw President Trump and Treasury Secretary Mnuchin unveil further sanctions against North Korea, with the support of China. The world is also seeing the after effect on the earthquake in Mexico and Hurricane Maria battering Puerto Rico, it is for all the reasons that I will sit out on the metals and in particular gold. There is the chance of gap open on Monday, and I don’t want to be caught in a position ahead of the weekend.
The GBPUSD has had a big week, we first had the corrective resistance level stretching back to Brexit break yesterday. The significant thing here is that this level held in the wake of the Fed yesterday, these support levels came in at 1.3450, that leaves the buyers in control above 1.3529 but I would like to see this pair to drift towards 1.3650 today where I will look to see if there are any offers building.
The USDJPY is another one on my watch list, yesterday saw the pair manage to find support on the 200 day MA at 112.15. A lot of traders use this common moving average as defining levels and so it was no surprise to see bids there, the thing I noticed is that the bounce was not very deep and I am looking for this pair to trade much lower. Any bounce back up to 112.15 – 112.25 will become interesting for short trades for me.
Important Economic Data out today
All Day NZD Parliamentary Elections
Consensus: None
Effect: Nothing consistent
14:30 CAD CPI
Consensus: 0.2%
Effect: Actual higher than expected is good for the CAD
14:30 CAD Core Retail Sales
Consensus: 0.4%
Effect: Actual higher than expected is good for the CAD
Tentative GBP PM May to speak
Consensus: None
Effect: More hawkish than expected is good for the GBP
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