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Dovish Fed lowers rate rise expectations; dollar drops

Posted on March 16, 2016 at 9:05 pm GMT

The Federal Open Market Committee concluded its two-day policy meeting on Wednesday and as expected, kept the federal funds rate unchanged for the second meeting at between 0.25%-0.50%. Accompanying the March meeting statement were the FOMC’s latest economic projections, including forecasts for the fed funds rate over the next three years. In what turned out to be a more dovish-than-expected outlook by the Fed, the latest projections expect GDP growth to be slightly weaker in 2016 and 2017 but unchanged for [..]

European Session – Dollar gains on upbeat US inflation report, all eyes now on FOMC

Posted on March 16, 2016 at 3:34 pm GMT

UK data dominated the European session but the market’s focus now shifts to the FOMC meeting later today to see if the Fed may shed some light on the timing of future interest rate increases. While no rate hike is expected at today’s meeting, investors will look for any clues on whether the next hike will come at least in June. The odds of more than one Fed rate hike this year are rising as US economic data have improved [..]

Sterling extends losses on growth downgrade, shrugging off strong jobs data

Posted on March 16, 2016 at 2:33 pm GMT

The British pound extended its losses into a third day on Wednesday, erasing around half of its gains made since the start of the month. Stronger-than-expected jobs data out earlier today failed to halt the pound’s decline, which has dipped back below 1.41 dollars for the first time in two weeks. The latest labour market report out of the UK showed that the unemployment rate was unchanged at 5.1% in the three months to January. However, the number of people [..]

Asian Session – Dollar advances ahead of FOMC; pound remains under pressure

Posted on March 16, 2016 at 8:29 am GMT

The US dollar pulled away from Tuesday’s lows in Asian trading on Wednesday as investors geared up for the Fed’s latest policy announcement later today. The greenback climbed to 113.69 yen in late session, having dipped as low as 112.62 yen yesterday on the back of weaker-than-expected retail sales figures. The yen was under pressure on Wednesday as earlier in the day, Bank of Japan Governor Haruhiko Kuroda put the prospect of deeper cuts in rates to negative territory back [..]

Technical Analysis – EURUSD losing upside momentum

Posted on March 16, 2016 at 8:05 am GMT

EURUSD maintains its bullish structure as long as the market remains above the Ichimoku cloud. However upside momentum is not strong at the moment. MACD has barely crossed above the zero line and the RSI is falling (although it remains in bullish territory above 50). Any upside moves will be limited at 1.1217 (Thursday’s post-ECB high). Prices have been retracing that rally and have fallen below the key 1.11 level and below the 200-day moving average. A fall into the [..]

European Session – Sterling under pressure on Brexit concerns, risk ahead of UK jobs data, BoE

Posted on March 15, 2016 at 3:57 pm GMT

There was some risk aversion in the markets today and caution among investors ahead of the FOMC policy announcement on Wednesday. Sterling was one of the worst performing major currencies during the European session as it fell below the key $1.42 level against the dollar. Renewed Brexit concerns and risk ahead of tomorrow’s UK employment report and UK Budget, as well as the Bank of England meeting on Thursday, are all putting pressure on the pound. The latest Brexit poll [..]

Bank of Japan pauses; leaves Europe alone to experiment with negative rates

Posted on March 15, 2016 at 3:02 pm GMT

The Bank of Japan’s decision to keep both its interest rate and its asset purchase program unchanged, could mean that negative rates will mainly be tested in Europe. Following the negative reaction in Japan from both the banking sector as well as the wider public, the Bank was reluctant to push rates lower so soon after pushing them below zero for the first time in history back in January. Therefore, it looks like the Bank of Japan is going to [..]

Bank of Japan less optimistic on outlook; keeps alive hopes of further easing

Posted on March 15, 2016 at 11:23 am GMT

The Bank of Japan decided to keep monetary policy unchanged at today’s meeting as expected, holding the interest rate on some current accounts held at the Bank at -0.1%. The decision follows confusion and criticism of the Bank’s negative interest rate policy since its introduction in January. The Bank had strongly signalled at its January policy meeting that it will “cut the interest rate further into negative territory if judged as necessary”. This was also reiterated by the central bank [..]

Asian Session – Yen advances as BoJ stands pat; Aussie and kiwi in retreat

Posted on March 15, 2016 at 8:57 am GMT

The Japanese yen firmed in Tuesday’s Asian session after the Bank of Japan kept monetary policy unchanged at its latest meeting. Although no change had been expected by the markets, the Bank of Japan removed the bias for further cuts to its interest rate to negative in today’s statement. The US dollar fell from a high of 114.14 yen earlier in Asian trading to 113.20 yen in late session. The euro and the pound both also weakened, declining to 125.65 [..]

Technical Analysis – GBPUSD rise ends at 50dma resistance

Posted on March 15, 2016 at 8:07 am GMT

GBPUSD found strong resistance at the 50-day moving average and has moved back down after several tests at this level around 1.4365. The pair is now testing support provided by the 50% Fibonacci retracement level of the decline from 1.4667 to 1.3834. A daily close below this 50% Fibonacci level at 1.4248 would strengthen the bearish bias. Momentum has turned negative which is a bearish signal – RSI has fallen and is testing the 50 level. There is now scope [..]

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