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Dollar firm ahead of FOMC

September 16, 2014

Article by ForexTime

USD/JPY and the JPY crosses traded tight ranges with many unwilling to take aggressive positions ahead of event risk this week – FOMC policy announcement Wednesday, Scotland independence referendum Thursday. USD/JPY was bid into the Tokyo fix but fell off thereafter as Japanese exporters sold. From 107.21, it traded through bids around 107.00 and tripped trader stops below to 106.93. It has since bounced with bids/buying interest from Japanese importers/investors, option players and offshore names solid from the low. So-so large vanilla option expirations at 107.00 today helped. Offers remain from ahead of 107.50 with short-term US specs noted at 107.40 and Japanese exporters from 107.50. Stops are mixed in above. EUR/JPY see-sawed between 138.55-72 in sympathy with USD/JPY. The bias remains down however. GBP/JPY traded soggy between 173.64-99. Most in Tokyo believe Scotland will likely vote to remain in the UK however. AUD/JPY traded sideways between 96.66-84, still just shy of 50% retracement of the 93.90-98.65 move at @96.29. NZD/JPY was better bid between 87.53-69, maybe looking to break decisively above its Ichimoku cloud top at 87.69.

EUR/USD opened in Asia at 1.2941 after facing downward pressure overnight on profit-taking in EUR/AUD and EUR/JPY. Up a bit early as USD gave back some of yesterday’s gains against the AXJ currencies and as USD/JPY fell below 117.00, EUR/USD rose to 1.2960 before talk of very good offers ahead of 1.2980 discouraged attempts higher. It drifted back towards opening levels later. With the market having largely factored in a more hawkish Fed statement Wednesday, some believe the risk may be for some disappointment, and this could keep EUR/USD better bid into the announcement and especially with the market still very long USD.

GBP/USD moved up from 1.6221 to 1.6250 before falling back later to about where it started. Though many now believe Scotland till opt to remain in the UK, market jitters are likely to continue. EUR/GBP did little, in a holding pattern between 0.7970-77 in Asia.

USD/CHF see-sawed between 0.9334-57 and essentially going nowhere in Asia. EUR/CHF was slightly better offered between 1.2096-1.2106.

AUD/USD opened in Asia at 0.9032 and traded up to 0.9055 before falling back later to 0.9013 but still in no hurry to go anywhere fast. It seemed to be on a slightly better footing after last night’s modest bounce. The RBA minutes produced a mild fillip but real money-players sales capped it. It drifted lower thereafter. Some bids returned from around 0.9030 but could not stem further weakness.


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