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Market Insight Commentary – Forex
Today's News Headlines
- As bullish as Fed Chair Powell was yesterday, the Fed minutes yesterday showed that the vote to leave rates unchanged was 11-1.
Market Insight Commentary – Indices
Market Recap
The testimony of new Fed Chair Powell trumped everything today, the release of his comments had limited impact on the dollar. His actual comments moved the market though as he cited better economic data, global growth and better exports as reasons to make him believe that the US is in a better place than last year – this would suggest more rate hikes – and the yields starting to price this in.
I personally found these comments a bit puzzling, no sooner had he made these comments – the economic data was released, and they were shocking. To reference fantastic exports 5 minutes before the trade balance shows that exports are at the worst levels in 4 years was also strange. In all, the data releases don’t support his comments and I just wonder when the market takes him to task – the honeymoon period will come to an end soon.
The EURUSD ended the day at the lows, near 1.2200 which is the swing low stretching back to the beginning of the year and I suspect that some buyers will start to enter the market here. The sellers will need to see a break of these current levels to target both 1.2165 and 1.2135, the buyers will want to see a break above 1.2260 for confirmation that yesterday’s move was exaggerated.
The AUDUSD too closed at the lows of 0.7780, which is not far away from the 200 day MA and the 100 day MA at 0.7769. These levels will become the barometer this morning for both the buyers and the sellers, I suspect that the buyers will lean against the key MA levels and the sellers will get excited if they are broken.
My opinion yesterday was that the market exaggerated the dollar move yesterday, and hopefully some inspection of the data will show that current market conditions don’t support the Feds view. I look to everything to recover somewhat against the dollar today.
Important Economic Data Due Today
15:30 USD GDP
Consensus: 2.5%
Effect: Higher than expected is good for the USD
17:30 USD Crude Oil Inventories
Consensus: 2.4M
Effect: No consistent effect on the USD
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