FOMC Minutes Mixed Brings Some Strength Back To USD April 9, 2015
FOMC Split On Rate Hikes Minutes Show
The FOMC minutes showed the the voting members were split on doing rate hikes in June giving a little bit of strength back to the USD. However some were also concerned about the strong USD having an effect on exports and growth. Well duh but I have to say it will be much harder to manage any hikes if that USD Carry trade I mentioned in yesterdays commentary plays out in force. Therefore a rate hike would strengthen the USD more forcing carry trades that are under water to close the effective USD short and then we get more USD strength. So with the USD at current levels and the recent jobs data I could probably say with some certainty that they wont be raising rates this year but that would be predicting the Fed and I have learned they are unpredictable so I wont even if its the most probable.
EUR/USD Runs Three Pushes And Shows Bottoming
The EUR/USD now shows three clean pushes and a bottoming formation so we should see at least some sort of reversal today. I have to say that the level it stopped at isnt that strong so if we can see that the bottoming gets taken out with conviction I will be open for the short. So far this morning its holding but not looking good. The best long will be on a stop run to the lows at 1.0761 but I wont be taking it during Asia. Otherwise if they do break it down early I will be looking for London to confirm before taking the short on the backside. Kudos to the members who caught the nice short from the 1.0870 yesterday. It didnt quite hit my entry but I did catch the GU.
GBP/USD Rejects Test Of Recent Highs
The move to test the highs on the GBP/USD yesterday was mostly fueled by the EUR/GBP dropping substantially. Most likely either covering EG longs or pricing in expectations of the BOE today, or both for that matter. Since I was away for most of the London session I hung around for the NY open and took the short from 1.4961 on the two pins at the ADR and still holding with my stop at +76. I would like to hold it through the BOE but the chance of it knocking me out sooner is good if they are thinking Carney will threaten a rate hike again.
With no clear direction and the levels being weak I wont look to enter this pair today if I am knocked out unless it shows a set up at 1.4806 for a long. The Asian high of 1.4882 is valid with the wide range but would be much more risky to trade with the BOE news later.
EUR/JPY Running Extended Intraday pushes
With the choppy pushes down on the EUR/JPY it does add some probability for a continuation but when they push like this it could turn at any time so I will be open on direction here today. The best level to short is up at 129.88 but a test of the hourly 200 just above could also happen so I will be cautious. Of course a long from 129.41 is valid as well but I will be watching for the conviction below to keep me out of a bad trade.
Forex News Today
The calendar is rather slow until the BOE Rate and Asset Purchase release. Its highly doubtful that they will be making any moves but if Carney says something about rate increases sooner rather than later then the GBP will get strong again. Otherwise if hes expected to say something and dont it should drop.
The US has Thursday Unemployment Claims expected to rise by 20K. If it does jump above 300K then we should see some USD weakness but may be short lived if Carney gets them moving.
The Asian session has Chinese inflation data to watch tomorrow and should effect the AUD on a decent surprise.
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