Session close (Wednesday, May 2, 2018): Settled at 1.2025, down 11 ticks
Fundamentals: As expected today the Federal Reserve did not raise interest rates. The dollar initially reacted lower to the statement but solidified itself before trading to a new session high. While the Fed acknowledged inflation has stabilized near their target, they referred to reaching their inflation objective as symmetric. This eludes to their willingness to allow inflation to run hot in order to assure conditions are not transitory. All in all, these minutes were dovish. However, the dollar’s relationship strengthened against all pairs and the euro finished down about half a penny. This afternoons announcement marks the beginning of a busy back half of the week.
Tomorrow, we look to Employment and then Confidence data out of Spain at 2:00 and 3:00 am CT. The highlight of the early morning is a read on Eurozone CPI due at 4:00 am CT, however, this number rarely deviates from expectations; if it does, look for volatility. ECB official Constancio speaks at 7:00 am CT. From the U.S, weekly Jobless Claims, Nonfarm Productivity and Trade Balance data are all due at 7:30 am CT. Markit Composite and Services PMIs are due at 8:45 am CT. Durable Goods Orders and one of our favorite data points, ISM Non-Manufacturing, are due at 9:00 am CT.
Technicals: While we have been far from advocating to buy the Euro and close your eyes, we have had a Bullish Bias for a very long time now. Our long-term Bias still leans Bullish. However, due to today’s electronic close and reversal from initial strength after the FOMC Meeting, we must become Neutral to clearly exude that we do not see any trade here at this time. We must see the Euro close back.
Session close: Settled at .9136, up 2 ticks
Fundamentals: The Yen did not take out its 10:00 am CT low of .9115, however, just as other currencies paired against the dollar, the Yen gave back the initial bounce after the FOMC Meeting. Though it settled in the green, it finished the electronic session in the red. What is more interesting than this currency move is the fact that the fear gauge did not tick up given the weak close in equities; neither the Treasuries, yen or gold saw any life from such. It is a holiday in Japan tomorrow but there is a full slate of U.S. data mentioned above.
Technicals: We have been more Neutral in the Yen and even pointed to the path of least resistance lower.
Session close: Settled at .7510, up 19 ticks
Fundamentals: The Aussie has been the one currency against the dollar in which we are Bearish in Bias. Though we said traders must manage risk and/or take a profitable position ahead of the RBA Monday night, the weakness has continued. Caixin China Manufacturing came in better than expected last night and helped lift the Aussie off the floor. While it gave back all gains ahead of the FOMC due to U.S. dollar strength, its short lived post-FOMC bounce opens the door to a continued weakness. Data out of Australia tonight will be key in confirming this; Building Approvals, Trade Balance data and Private House Approvals are all due at 8:30 pm CT.
Technicals: Price action continues to battle against major three-star support.
Session close: Settled at .7787, down 3 ticks
Fundamentals: Despite solid fundamental groundwork this week, price action stalled, and weakness ensued into mid-morning. On a positive note, crude oil could not go down on a bearish EIA report and finished higher. Tomorrow brings Trade Balance data from Canada to accompany the U.S slate. We also await U.S jobs data Friday and though Canada’s does not come for another week there is Ivey PMI. All in all, the Canadian finds itself at a critical point and will become extremely susceptible to the economic calendar to finish out the week.
Technicals: Solid technical and fundamental framework over recent sessions allowed us to become more Bullish in Bias once again. However, after today’s session reversal.