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Fed signals one rate hike in 2016 but dollar comes under pressure

Posted on September 21, 2016 at 8:46 pm GMT

The Federal Reserve decided to leave the federal funds rate unchanged in a range of 0.25%-0.50% at the end of its two-day meeting today in what was the most divided vote since December 2014. Three members of the FOMC dissented in the September meeting with Esther George, Loretta Mester and Eric Rosengren all voting to raise rates by 0.25%. This signalled that the Fed is getting closer to raising rates again, having stood pat since last December, when it tightened monetary [..]

European Session – Yen performs U-turn on BoJ policy rethink while Fed decision looms

Posted on September 21, 2016 at 2:36 pm GMT

The Japanese yen performed quite a U-turn during today’s trading, as policy that was first thought to be a yen-negative was later reassessed as a yen-positive. Other currency pairs that did not involve the yen were mostly waiting for the Fed’s decision on interest rates later in the US session. The pound was trying to recover following its recent heavy losses on views that Brexit could ultimately involve a more distant economic relationship between the EU and the UK than [..]

Technical Analysis – GBPJPY falling towards critical 130 support level

Posted on September 21, 2016 at 2:09 pm GMT

GBPJPY broke below the important support zone from last Friday to extend its decline from around 135.00 to 130.55 by Wednesday. Immediate resistance lies at today’s high of 133.24 and support would be at the psychological 130.00 level. The 4-hour chart is looking very bearish, with prices falling since earlier this month. RSI is in bearish territory below 50. But it is at oversold levels near 30 so this suggests some consolidation in the near term. On the daily chart, [..]

Technical Analysis – USDJPY remains in bearish channel

Posted on September 21, 2016 at 1:36 pm GMT

Selling pressure on the USDJPY increased after the pair broke below important support at 101.40. This was quite a big move that changed momentum and pushed RSI back below 50 as prices fell from the day’s high of 102.77 to a low of 100.59 within 8 hours. Prior to this big move down the pair was in a range between 101.40 and 103.00 for the past two weeks. If the decline is sustained, then there is scope to target the [..]

Bank of Japan introduces Yield Curve Control but yen reverses losses

Posted on September 21, 2016 at 11:16 am GMT

The Bank of Japan announced an overhaul of monetary policy at the end of its two-day meeting on Wednesday, surprising market analysts that had conceded expectations of fresh action by the Bank. After promising a “comprehensive” review of its policies back in July, the Bank of Japan today announced several tweaks to its existing policies in an attempt to regain market credibility that it can achieve its objective of 2% inflation. The main change in the BoJ’s policy is the [..]

Technical Analysis – EURJPY capped below 50-day moving average, maintains bearish market structure

Posted on September 21, 2016 at 7:37 am GMT

EURJPY briefly jumped higher early on Wednesday but the rally stopped just below the 50-day moving average, which is acting as a strong resistance level around 114.55. Immediate support lies at 112.35, which is the August 8 low. EURJPY is expected to remain within a range of 112.35 and 116.00 in the short term. The flattening 50-day moving average is an indication that the market is likely consolidating in this area. RSI remains below 50 in bearish territory and suggests [..]

Asian Session – Yen weakens after BoJ policy announcement

Posted on September 21, 2016 at 5:40 am GMT

Today’s highly-anticipated policy announcement from the Bank of Japan was delayed and trading was cautious ahead of this big risk event. The reaction from the market was overall positive once the BoJ decision was released and digested by investors and the yen consequently weakened. Initially there was some confusion and disappointment on news that the BoJ did not deliver a further rate cut and maintained the negative interest rate policy. It kept the minus 0.1% rate that it applies to [..]

European Session – Pound underperforms in muted trading weighed by ‘hard’ Brexit fears

Posted on September 20, 2016 at 2:53 pm GMT

The British pound underperformed other major currencies in Tuesday’s European session, while uncertainty ahead of the US Federal Reserve and Bank of Japan policy decisions tomorrow kept trading muted. Central bank policy was once again the dominant market theme as the absence of any other headlines meant investors’ focus was on the Fed and the BoJ, which both start their two-day policy meetings today and will announce their decisions tomorrow. The dollar was stuck in a tight range against the [..]

RBA minutes suggest interest rates set to remain lower for longer

Posted on September 20, 2016 at 1:49 pm GMT

The Reserve Bank of Australia released minutes on Tuesday of the latest policy meeting two weeks ago. Markets watched to see if they provided more clues as to the current outlook of the central bank on the economy. However, there was not much new from the RBA’s decision statement on September 6. At least the minutes were not dovish and indicated that more easing was off the table for now and probably until next year. The RBA was optimistic about [..]

A brief take on the US dollar and the UK pound following Brexit

Posted on September 20, 2016 at 1:25 pm GMT

Brexit was one of the year’s key events, which caused quite a lot of volatility initially. Looking at the currency market, it is worth revisiting some of the key recent fundamental influences for two currencies in particular; the pound and the US dollar. Starting with the pound, it is interesting to note that the initial shock devaluation that Brexit inspired was followed by some sideways action. Bank of England stimulus hurt the pound initially, but stronger-than-expected economic data created some [..]

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