U.S. Dollar Trading (USD) although the FOMC held rates at 0.25% and the statement had not critical changes we did see a strong day on US stocks and the Dollar rallied against its bigger partners. US long term interest rates increased with the bond market signaling they believe the FED may tighten quicker even if their statement didn’t change. Also supporting the stock market and investor sentiment was the release of US bank stress tests which were generally positive. Looking ahead, Fed Chairman Speaks.
The Euro (EUR) the EUR/USD was strong ahead of the FOMC attempting to rally but capped at the 1.3190 level. The post FOMC action saw a push lower and the market closed on a weak footing even as the stock market rebounded. The EUR/JPY is doing well and is a better way to express the risk appetite. The Sterling (GBP) The EUR/GBP reversed aggressively overnight as the GBP/USD acted like more of a traditional risk asset and was supported by the strong risk appetite. The GBP/JPY broke above Y130 as the Yen weakness post FOMC accelerated and we could see this emerge into a strong uptrend in coming weeks. Looking ahead, February Claimant Count forecast at 6k vs. 6.9k.
The Japanese Yen (JPY) the USD/JPY was the currency in play yesterday moving to fresh 11 month highs above Y83 on the back of the US Bond market indicating investors believe interest rates will increase in the US before Japan. The BOJ held at 0.1% as expected but did disappoint a few investors hoping for more stimulus. Australian Dollar (AUD) The Aussie rallied in Asia but failed to hold onto these gains in the US session testing 1.0500. The positive US bank stress tests results helped US stocks close at 3 year highs. AUD/USD has found support under 1.0500 solid so far but the rebounds have been weak. UPDATE March Australian Consumer Sentiment -5% vs. +4.2% in February.
Oil & Gold (XAU) Gold was under pressure from the stronger USD falling below $1700 and tumbling after the FOMC sessions. Support was found at $1663 before bouncing to $1770. OIL/USD maintained the $106-$107 range with the FOMC and stock markets having little effect.
Pairs to watch
USD/JPY to extend gains above Y83 as the US data supports?
EUR/USD is the 1.3000 level going to hold if tested?