By Russell Glaser
As the US trading session nears, traders are anticipating the FOMC statement as well as US crude oil inventories. Prior to the releases both the euro and crude oil are trading higher on expectations for the Fed to follow through on their $600 Bn quantitative easing program.
Earlier in the day the Bank of England released its monetary policy meeting minutes that showed another member of the policy committee has come out in favor of raising the benchmark interest rate for Britain. This is the second consecutive day the UK has surprised the markets following yesterday’s significantly weaker than expected 4Q GDP numbers which posted a 0.5% contraction.
Today traders responded to the announcement from the BOE by bidding the pound higher versus the dollar as the GBP/USD corrected more than 50% of yesterday’s declines. At lunchtime of the European trading session the GBP/USD was up at 1.5875 from 1.5814. The EUR/USD was higher as the pair pushed above the 1.3700 before falling back to its opening day price of 1.3691. Spot crude oil was up at 86.73 from 86.52.
Markets have quieted prior to the release of the FOMC meeting minutes at 19:15 GMT. Most economists expect the Fed to announce its intention to follow through on the QE II program and purchase $600 Bn of treasuries. A positive surprise from the meeting minutes may be an upgrade to the Feds outlook on the US economy. A quiet Fed meeting may allow for current market trends to extend themselves further and the EUR/USD could push above 1.3700 to the Nov 22nd pivot at 1.3780.
US crude oil inventories are due to be released today at 15:00 GMT with market expectations for an increase to inventory numbers by 0.9 Mn barrels. Spot crude oil prices appear to have found support at the 100-day simple moving average where the price has turned higher. A larger than expected draw down will be a positive for spot crude oil prices with short term resistance located at $87.00 followed by $88.80.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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