US Dollar in demand after Fed disappoints the doves
Thursday 1 August 2019
So Powell & Co at the US Federal Reserve delivered the expected 0.25% cut but still disappointed the bears and we've seen the Greenback make gains on the "sell rumour/buy fact" play yet again. I can't recall any occasion in recent memory when the Fed have fully delivered on promised hikes or cuts so no one should be that surprised.
Powell said the cut was not a "one and done " and was still data driven which is somewhat paradoxical given recent figures. Trump has blasted him for failing to deliver and US equities saw an immediate fall too all adding to the already confusing picture. We've seen the Greenback grind its way higher in Asia and this morning as markets re-assess and shorts continue to cover. Fragile risk remains and the general uncertainty continues.
GBPUSD has tested 1.2100 and remains on the back foot with the psychological 1.2000 target level looming ever closer.EURGBP has understandably fallen as the month-end demand disappears and Euro tumbles generally as EURUSD posts 2-year lows but finding support around 0.9100 (GBPEUR sellers around 1.1000). GBPJPY is finding a base at 131.80-00 still as USDJPY rallies post-Fed to 109.32 but sellers remain poised.
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. No real changes expected from the BOE today re monetary policy but we have the latest Quarterly Inflation Report too and a Carney presser to keep markets and algos feeding from the scraps. Sadly I won't be around for it due to a long-standing prior commitment but I hope my ongoing views here and levels will serve you well.
EURUSD has continued its journey south in somewhat of a hurry after breaking 1.1080-00 but so far stalling at the bids/support at 1.1030. USDJPY has taken good advantage of the FOMC to break up through 109.00 but so far stalling around 109.30 as fragile risk continues to attract Yen demand and where we also have decent option expiry interest today. USDCHF has also found some expected dip demand again but the general acceleration in the Euro decline has seen EURCHF down to 1.0993 this morning helped by the CHF risk-off demand.
AUDUSD has been down to test 0.6830 and remains on the back foot while USDCAD has finally broken out to the top side to post 1.3227 as shorts run for cover but still ranging overall.
Fickle Forex markets ever prevailing so be ready with your entry/exit levels and orders as always.
Bring on the Aussies!
Have a good day out there one and all.
Interbank Rate 08.30 BST