Coasting into the Fed

Considering that Fed’s Brainard had put another nail in the coffin of a Fed rate hike this month, the dollar was on decent form yesterday, gaining against most of the major currencies. The dollar and kiwi were particular soft, whilst sterling was not far behind, helped by softer than expected inflation data. The better dollar tone was largely came on the back of the weakness seen in equities, which are having something of a roller-coaster few days. Note that we have further UK data today in the form of labour market stats, ahead of the BoE decision tomorrow. There is seen very little chance of a further change in policy, but the statement and minutes will be closely watched to see if the MPC are still seeing the risk of a further easing later this year. The activity data at least does not give the impression that this is needed, with yesterday’s PPI data suggesting that price pressures are likely to increase in coming months, in part thanks to the weakness in sterling.

Looking at the majors and cross rates, yesterday’s sterling weakness put EURGBP back above the 0.85 level, above which it’s currently sitting. Moves above here have proven to be fairly brief this year, so a sustained break higher could prove to be tough. The Aussie also stands out on the majors, given the weakness seen over the past week, with the next support level on AUDUSD coming in just above the 0.74 level.

Did you know?

Telephones and telex used for trading quotes were replaced in 1973, as Reuters introduced computer monitors.

Word of the day
"Day Order" - A trade order that is valid until the end of the given trading day, at which point it automatically expires. Day Orders are also known as Good for the Day Orders.
Pro Tip

Most market activity occurs when at least two market centres are open at the same time.