Forexlive Americas FX news wrap: Dollar edges lower as Fed decision awaited

Forex news for NY trading on September 17, 2019

In other markets, the snapshot near the close is showing:

  • spot gold is up $3.12 or 0.21% at $1501.51.
  • WTI crude oil futures are trading down $4.17 or -6.65% at $58.73. The prices down from the settlement level as private inventory data shows a surprised build in crude inventories.

The long awaited September FOMC decision is less than 24 hours away and a tight Fed Funds market had traders thinking that perhaps it is indicative of a market that is tighter than the Federal Reserve wants.  As a result, they may announce not only a cut but perhaps the resumption of QE to help address the liquidity issue.  We will find out at 2 PM ET tomorrow when the Fed will announce their decision. 

PS the chance for a 50 BP cut rose to 15.3% from near 0% yesterday (and last week).  The most recent high % was up at 43% on around August 15.  

As a result, the dollar fell overall with most of the declines coming versus the EUR (-0.65%),the GBP (-0.56%) and the NZD (-0.24%). The dollar near unchanged vs the JPY, CHF, CAD and AUD after being higher vs. those currencies earlier in the day.  

The decline in the USD came despite what was some decent Industrial Producation and Capacity Utilization data. The IP rose 0.6% vs 0.2% estimate while the Cap.Utillization rose to 77.9% from 77.6% (last month at 77.5%).  In the only other US data, NAHB Housing Market index also beat to the upside at 68 vs 66 estimate.  Data was better but the USD did not really care.  

The hope for a softer Fed (with QE) helped to give the US stocks some lift.  Admittedly, the indices muddled along for most of the day, but did close near highs for the day. The Nasdaq led the charge.  Below is a snapshot of the % changes (low, high and close).  

The US stocks closed higher.In the US debt market today, the yields started lower and moved back toward unchanged levels before moving back to the downside in afternoon trading.  The yield curve flattened a bit, but it was not a material change.
US yields end the session lower in an down, up and down day.

The technicals for some of the major indices shows:

EURUSD:  The EURUSD started to move higher in the early NY session only to run into some teemporary resistance at the 100 and 200 hour MAs ata 1.1039 area. After a brief and shallow correction, the price extended above those converged MAs and trended higher for the rest of the day. The price is closing near the highs for the day at 1.1071 with the next targets at 1.10847-886. About that and the familiar 1.1100 to 1.1110 area will be eyed. Recall the swing lows from April, May and July all bottomed in that area. Last week, the high stalled at 1.1109.

GBPUSD: The GBPUSD was the second strongest currency of the majors today. The price did trade above its 100 day MA at 1.2403 to a high price of 1.2526, but is closing just below that MA level at 1.2497.  The break above the 100 day MA was the first look since May 13 (4 months ago).  The failure to close above the MA will have traders looking for the next shove. If the price can move and stay above, the 1.2580 high from mid-July and the 50% retracement at 1.2668 are upside targets down the road. If the price break fails, the 1.23815 is the next downside support target for the pair. 

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