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Waiting for FOMC

Waiting for FOMC
Yesterday players were indecisive, almost all currencies stayed within ranges of past several days. Euro’s attempt to break through above 1.1300 failed. Weak ZEW report facilitated it, morning attempt was the only one. British data on inflation were worse than predicted too. However, there correction was short-term and the pair returned above 1.5600. Now pound looks more promising than other currencies. Apparently, investors’ desire to escape from risks of Greek default supports pound. American statistics showed mixed results. As expected, new houses laying decreased after maximums of previous month, but number of building permits grew suddenly, what implies further improvement of housing market in future. Still, it gave weak support to dollar. Everyone is waiting for FOMC. Stalling of the market during last six workdays has already tired everyone. So, today’s FOMC session can become such an event that will awake the market. The only thing that we can say definitely is that increase in rates is practically impossible at this session. The rest depends on accompanying comments on outcomes of the session. Herewith the most relevant things are answers to following questions: how balance of power concerning terms of start of monetary policy normalization has changed in FOMC, whether clearer guidelines about Fed’s steps in this direction will be given and whether concerns about high rate of dollar will be expressed, and whether in light of contradictory economic data for last weeks forecasts on economic growth will be decreased. There are numerous variants and combinations of answers. This time we aren’t going to predict most probable scenario. The market has approached this event being in uncertain state, when the reaction can be strong, sharp and to any direction. In the afternoon it makes sense to pay attention to one more economic report from the U.K. – on labor market. Here the situation remains positive for pound, forecasts promise this tendency will be retained. Forecasts on growth of wages looks promising, what will give hopes for speed-up of inflation expectations. Pound has one more opportunity to test May maximums until FOMC session. 
Trade tactics:
We have no ideas about euro’s reaction to outcomes of FOMC session. However, British pound has attracted attention. Short-term indicators look overbought. Close May maximums are natural resistance. We have planned the sale of GBPUSD pair from levels above 1.5780, if they are reached until publication of FOMC decision, stop at 1.5890.
Any opinions, advice, news, research, analyses, prices or any other information presented on this webpage is provided as general market commentary and does not constitute investment advice. "Vector Securities" shall not be liable for any loss, including loss of profit, which may arise directly or indirectly from the use of this information. 

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