FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
The U.S. dollar cruised mostly sideways with a slight bullish tilt against the Aussie and Kiwi early in the day, while traders looked ahead to the FOMC announcement in the upcoming U.S. session.
Additional upside pressure came in play around the London session, with European currencies and the yen also edging gradually lower versus the U.S. currency. The actual announcement sparked a sharp rally, as the Fed added language on the “timing and extent” of future rate changes, as well as the dot plot projections suggesting fewer than expected easing moves for the next couple of years.
In addition, FOMC member Hammack’s dissenting vote may have also contributed to gains for the dollar, along with Fed head Powell’s comments during the presser about September inflation forecasts having “fallen apart.”
Some also say that Trump’s remarks during an interview insisting that he would oppose a bill preventing a government shutdown also boosted the U.S. currency later in the session, as this sparked views that he would prioritize stock market gains over avoiding federal deficits.
By the end of the day, the U.S. dollar logged its largest lead versus NZD (2.40%) followed by AUD (+1.89%) while USD/JPY (+0.83%) and USD/CHF (+0.95%) were behind the pack.
Upcoming Potential Catalysts on the Economic Calendar:
-
BOJ Policy Statement and Press Conference during Asian session
- Swiss Trade Balance at 7:00 GMT
- German GfK Consumer Climate at 7:00 GMT
- Euro Area Current Account at 9:00 GMT
- BOE Monetary Policy Decision and MPC Minutes at 12:00 GMT
- US Final GDP q/q & Unemployment Claims at 13:30 GMT
- US Existing Home Sales at 15:00 GMT
- NZD Trade Balance at 21:45 GMT
- Japan National Core CPI y/y at 23:30 GMT
A couple more major central banks (BOJ and BOE) are lined up to announce monetary policy decisions within the day, likely spurring price swings for JPY and GBP pairs during the actual statements.
While both are expected to keep interest rates on hold for the time being, the tone of their press conference and meeting minutes could set expectations for future policy moves next year, so keep your eyes and ears peeled for major changes!
