FX Morning Colour: Usd downed by another ‘dovish’ Fed hike

DXY

The Index is back below 93.500 having failed to sustain 94.000+ levels in the run up to the FOMC meeting, and despite some stronger/bullish SEP projections the negative reaction is largely due to an unchanged 2018 dot plot flagging 3 rate hikes along with Fed chair Yellen reiterating that further policy normalisation will be gradual. She also lamented low inflation at her last press conference, while adding that most voting members had factored tax reforms into their forecasts. On that note, latest reports suggest that the House and Senate have tentatively agreed to a compromise bill ahead of a vote expected next week. Back to the Greenback, 93.000 now appears more compelling as opposed to a 94.000 return, especially on supportive impulses for rival currencies in the basket.

CHF

The SNB kicked off Thursday’s busy EU Central Bank agenda with unchanged rates, as widely expected, while also maintaining the view that the Swiss Franc remains highly valued despite more depreciation (since the last policy review in September) on reduced safe haven demand. However, it will stay active in the FX markets to ensure the Chf does not strengthen excessively, and thus Usd/Chf and Eur/Chf are both firmer around 0.9880 and 1.1680 respectively.

NOK

The Krona is sharply higher in wake of the Norges Bank meeting and a big change to the rate profile with a hike now seen in the Autumn next year from mid-2019 previously. Eur/Nok has plunged from circa 9.8900 to a 9.7160 approx low, with bids seen around 9.6900/9.7000 and offers at 9.8000 on any rebound.

AUD

Another big winner and extending gains vs the soggy US Dollar to 0.7675 peaks overnight as Aussie jobs data smashed forecasts and on a large proportion of full time jobs. A pivot around 0.7624-27 was easily surpassed in the process, and the charts now look firmly bullish for the pair. Next upside technical objective is 0.7730, though 0.7700 will obviously provide some psychological resistance if nothing else.

GBP/EUR

Both benefiting from broad Usd weakness, with Cable back above 1.3400 and Eur/Usd reclaiming 1.1800 and now looking for further direction from the BoE and ECB. Eur/Gbp back down through 0.8800 and a key MA just above the figure despite upbeat Eurozone preliminary PMIs, as Sterling enjoys some support from bumper UK retail sales data.

JPY

Looking to build on gains vs the Dollar having broken out of the recent range, with Usd/Jpy extending to the downside below 113.00. However, strong support is seen between 112.50-40, and then 112.00, while sellers are said to be waiting at 113.00, with larger offers some way above that from 113.60-75.

14 Dec 2017 - 09:37- Forex- Source: ransquawk

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