Posted on: 18 March 2016, by: Pepperstone Support, category: Market Review
In the aftermath of the dovish FOMC, weakness in USD prevailed.
EURUSD has tested 1.1340 and settled not too short of that level. USDJPY has fallen to 110.67. USDCAD below 1.3000 and AUDUSD, now tests 0.7645/50.
Of these pairs in G10, much attention has fallen on USDJPY. It all started just after the NY open- the pair sprung higher from session lows and eventually tested 112.00.
Chatter circulated as to what caused this spike and that is still yet to be confirmed.
US data was largely ignored in wake of the FOMC:
US initial jobless claims rose by 265k versus 268k expected, while continuing claims hit expectations of 2225k.
Current account balances showed a wider deficit than thought; total of -USD125.3bn versus -1118bn expected.
The Philly Fed also rebounded strong - from -2.8 to 12.4. The forecast was -1.5.
Jolts job gains were health again. Up 5541 versus 5500 expected.
The February leading economic indicators (LEI) index grew 0.1% (median 0.2%). The 6m annualized reading rose to 0.7% from 0.5% (was 0.7%) in January, still underperforming the 8.4% surge in July of last year which was the highest reading since 10.6% in April of 2010. Component data strength was driven by big improvements in initial claims data.
Thematic interest has been very mixed from a USD perspective, with the heaviest USD selling concentrated in EURUSD and GBPUSD. In contrast, USD buying was focused against EM pairs such as USDMXN, USDZAR and USDSGD.
As for Friday, we will be watching a few levels in G10:
USDJPY: A move below 111 (the figure) suggests 110.09. A close below there confirms that we may very well go on to test the 105 H&S target.
USDCAD: Near-term support is 1.2835/30
GBPUSD: Has cleared above 1.4396 resistance. Watch on closing basis for the week.
NZDUSD: Currently approaching 0.6883 resistance.
AUDUSD: Next resistance is 0.7812.