The main thing in the US retail sales report was that the indicator for January was revised down from 0.2% to -0.4%. Although these data aren’t critical for the Fed, they remind us that not all is well in the US economy. In the recent days the market’s expectations switched to the more hawkish side. However, demand for the greenback will likely decline on Wednesday, especially against safer franc, euro and yen.
The Federal Reserve will announce its interest rate decision, economic projections and statement at 18:00 GMT. Janet Yellen’s press conference will start at 18:30 GMT. Traders will also pay attention to February inflation figures at 12:30 GMT. The rate hike at this meeting isn’t priced in, so in case of surprise from the Fed we’ll see US dollar jump and stocks fall. However, the main scenario is that the FOMC doves won’t allow a rate hike. Yet even just Yellen’s comments that the Fed will increase rates this year will give USD bullish impulse versus commodity currencies and gold.
Oil prices kept falling as Iran doesn’t want to freeze production. Such dynamics affected commodity currencies. USD/CAD reached resistance line at 1.3400. AUD/USD slid to the target of 0.7450. US dollar should be weaker on Wednesday, but after the releases the situation may change. Resistance for AUD/USD is at 0.7500/30, while the next support is at 0.7425.
British pound was once again affected by the potential Brexit: the polls showed than more people lean to voting for the UK to leave the EU. GBP/USD breached short-term uptrend channel. Below 1.4150 (38.2% Fibo of March recovery) the pair will fall to 1.4100 and 1.4080 (January 21 low). Resistance is at 1.4215 and 1.4270. Britain will release labor market data at 09:30 GMT on Wednesday.
USD/JPY fell below 113.00 after the Bank of Japan left policy unchanged and removed the phrase about the possibility of further rate cuts from its statement. Negative pressure will persist. Next support is at 112.30/00 and 111.00. Resistance is at 113.50 and 114.30.