The Jackson Hole meeting is hanging over the market where the Fed Chairman, Janet Yellen, will be making a speech this evening. The annual meeting gathers together the world’s leading central bankers, finance ministers and academics to discuss policy and world economic issues. Dean gives his thoughts ahead of that and how he expects the Forex markets to react.
Dean's Daily FX Update – 26 August 2016
In the EURUSD, price appears to be stalling after the bounce off the 61.8% Fib we put in place a few days ago. It almost reached our level of resistance and the expectation is that price may drift back to the 61.8 level during the morning session.
A dovish speech by Yellen may cause the pound to rally in the short term and Dean will be looking for opportunities to sell into strength. We have seen Sterling come back after spikes since the Brexit vote and Dean will be looking for more of the same.
The Aussie is stalling at 0.7626 and Dean will be using this level as support and should there be a dovish speech, he would expect the price to rise and test the resistance at 0.7724. A potential 100+ pips could be on offer.
The Kiwi is sitting right at its recent highs around 0.7310. It has moved very strongly over recent weeks and is a bit out of line with other commodity currencies. Dean would be nervous to be long this pair regardless of the outcome.
In the CAD, Dean is still waiting for the break out from the bear flag he discussed a day or two ago. Feels there could be a nice move to the downside, especially of oil holds its poise and Yellen is dovish. By dovish, he means that there is a low probability of an interest rate rise in the near future.
A tricky day today to trade FX and very much a 50-50 in many of the pairs. Maybe let the dust settle and relook at opportunities on Monday. UK Bank holiday on Monday so their equity markets will be closed.
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