Early FX colour

USD: The greenback firmer by 0.2% following the move higher in US rates amid source reports stating that John Taylor (very hawkish) made a favourable impression on President Trump in regards to the Fed Chair position. The break above 93.32 (38.2% Fib retrace of the October fall) and the subsequent push through 93.40 indicates a bullish trend forming, however 93.50 is capping further gains for now.

GBP had been capped ahead of the 1.3343 resistance level yesterday, which marked the 50% retracement from the September high, consequently pushing the currency back to the mid-1.32 with support not seen until 1.3145 (55DMA). GBP also very sensitive to brexit related headlines with yesterday’s reports that the UK would see Brexit talks breakdown if EU refuses to compromise sparking a 40pip move lower.

Implied volatility are at elevated levels this morning for GBP, as participants will digest the latest inflation readings. Consensus is going for a 5yr high of 3%, which would put renewed pressure on the BoE to raise the interest rate next month (priced in at 78%). Focus today will also be on BoE’s Carney and central bank newly recruits Ramsden and Tenreyo, who are due to testify before the Treasury’s committee.

EUR: The downward trend continues for EUR which ended yesterday’s session on the back foot amid the stronger greenback. Although with little key risk events until the Oct 26th ECB monetary policy decision it is possible that the pair will stay within close proximity to 1.18.

17 Oct 2017 - 08:42- Fixed IncomeBank Speaker- Source: RANsquawk

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