Fed cuts rates but jury still out
Thursday 19 September 2019
Last night the US Federal Reserve cut interest rates by 0.25% which was the lower end of expectations but left the door open for another cut in 2019 even if only 7 of the 17 FOMC members favour one. Cautious tones from Powell in the presser as expected and overall we've seen little change in USD pairs.
I highlighted yesterday that we still have the Saudi oil headlines, Brexit and trade war concerns all in play and risk sentiment remains variable. The US Fed announcement was certainly not the only game in town. Earlier this morning the Bank of Japan left interest rates on hold but also left the door open for further easing if needed but that tired rhetoric has been rolled out for a long time now.
GBPUSD held 1.2450 post-FOMC then found some Brexit/DUP support to test 1.2500-10 and I duly resold having pointed out on Twitter that the news wasn't that startling. We've since based around 1.2460. EURGBP finally broke down through 0.8845 bids/support triggering stops to post lows of 0.8821 (GBPEUR up to 1.1337) before running into Euro buyers again with month-end demand once again approaching. GBPJPY has also seen some good two-way action this time holding 134.50 to post 135.60.
I remain GBP bearish overall and will continue to rally-sell as my preferred strategy amid all the uncertainty/indecision including Brexit/political fallout but happy to buy back in the dips as always.Rinse and repeat.Still no reason to change my view any time soon. Some caution required atm ofc with some inherent dip demand and the algos ever-poised for news bombs. The UK Supreme Court today will retire and deliver its verdict on the legality of Johnson suspending Parliament and whether he misled the Queen. Verdict could arrive in next 24 hours but the judges have not indicated when as yet.
EURUSD found some dip demand again post-FOMC and has rallied to post 1.1065 this morning but remains tightly bound. USDJPY duly held 108.50 as per my post-FOMC tweet before falling to test 107.80 helped by some Yen risk-on supply too. BOJ left rates on hold and didn't rule out further easing as expected but Kuroda talk is cheap.USDCHF has also retreated from 0.9985 on some risk-off sentiment and softer USD this morning with EURCHF supply notable too.
AUDUSD failed to get back above the pivotal 0.6830-35 area and duly retreated further to break down to test 0.6780 helped by some sustained AUDJPY selling and remains on the back foot amid expectations of more cutting action from the RBA.USDCAD duly held 1.3230 again only to fail above 1.3300 with good two-way pips to be had still.
Fickle Forex markets ever prevailing so be ready with your entry/exit levels and orders as always.
Have a good day out there one and all.
Interbank Rate 08.33 BST