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Markets wrap: (20/09/17)

There weren’t any significant movements on the currency market on Tuesday, the 19th of September. The US dollar index closed slightly down, moving from 91.77 to 91.56, despite some positive data on the housing market. Building permits increased by 5.7% month on month in August. The euro index closed in positive territory, edging up from 95.09 to 95.35. The euro also continued its growth against the British pound, Japanese yen, and Swiss franc.

The New Zealand dollar got a boost yesterday from a rise in their GTD index, which was published at 17:33 (GMT 3). The GTD came out 0.9% up on the previous reading.

Today, at 2:50 (GMT 3), the Bank of Japan published its trade balance report. Imports and exports in Japan rose by 1.2% in August compared to July, with a positive balance of 367.31bn JPY. As such, the country of the rising sun continues its stable growth in export trading. GDP growth in Japan in 2017 will come to around 1.4% - 1.8%.

Day’s news (GMT 3):

  • 11:30 UK: retail sales (Aug).
  • 16:00 Switzerland: SNB quarterly bulletin.
  • 17:00 USA: existing home sales (Aug).
  • 21:00 USA: Fed interest rate decision.
  • 21:30 USA: FOMC press conference.

It’s unlikely that the Fed will announce a rate hike this evening, although Forex market volatility could increase significantly during the FOMC’s press conference. I suggest that anyone trading currency pairs involving the US dollar should do so with particular caution.

In my opinion, it would be better for the US economy if the Fed decided to maintain the key rate at its current level of 1.00% - 1.25% as well as to tone down its rhetoric on monetary policy. In such an event, the dollar could receive some psychological support and partially recover its losses against the euro, British pound, Swiss franc, and so on, in October and November.

EUR/USD

On the 4-hour timeframe, the EURUSD currency pair is continuing its upwards trend:

On the hourly timeframe, the EURUSD is trying to renew the “key top” of the correctional movement, which is located at 1.1990:

I reckon that if the EURUSD pair manages to gain a foothold above 1.1990, it could, if volatility is high, rise to the upper part of the range on H1 (1.2060 – 1.2080) before the Fed announces their decision or during their press conference.

Personally, I’m going to stay on the sidelines throughout the day. At the time of writing, the EURUSD pair was trading at 1.2012.

GBP/USD

On the 4-hour timeframe, growth on the GBPUSD pair has halted around the resistance line of the upwards trend:

In my opinion, trading on the GBPUSD pair may become volatile as retail sales data is published in the UK at 11:30 (GMT 3), although the Fed decision remains the most important development of the day. Accordingly, we’re likely to see some purposeful movement on this pair only after the Fed meeting has concluded.

At the time of writing, the GBPUSD pair is trading at 1.3518.

USD/JPY

On the 4-hour timeframe, the JPYUSD pair is trading in the middle of its potential range, which runs from 108.00 to 114.50:

The pair is currently trading at the 111.50 mark, on the 50% Fibonacci. I wrote earlier that I would consider opening a long position on this instrument should the Fed maintain interest rates at their current level and tone down their rhetoric on the subject. I outlined the scenario in which I’d do this in yesterday’s review:

Ideally, the USDJPY pair would first test 111.10 and then continue its upwards movement. If the upwards movement continues, I’ll open a long position with a Stop Loss level at 110.50. Of course, I’ll only start looking at this after the Fed’s meeting comes to an end.



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