Forex trading headlines 17 September 2014
The data
- Q2 2014 US current account balance -98.5bn vs -113.4bn exp
- August 2014 US CPI 1.7% vs 1.9% exp y/y
- September 2014 US NAHB housing market index 59 vs 56 exp
The FOMC
- FOMC Keeps considerable time in statement
- FOMC Statement: The Full Text of the September FOMC Statement
- FOMC: Comparison of the July and September Statements
- The Fed Projections for GDP, Employment and PCE Inflation
- The Fed Members Projection of the Midpoint of the Target Range or Target Level
- Yellen says exit strategy doesn’t mean policy change
- Yellen calls time on QE
- “Considerable time” pledge is highly conditional says Yellen
- Yellen won’t give away her position within Fed projections
- On dissents Yellen says it natural to have a varying range of opinion
- Will Scottish vote create global turmoil? Bog off, I’m not bothered says Yellen
Post FOMC analysis
- Dollar rallying on Fed decision, not sure why
- Dollar rockets even as FOMC language stays the same but Fed members shift their rate focus
- Hawkish or Dovish, Bullish or Bearish? Now the fun really begins as the market decides what it want’s to do
Other news highlights
- Falling inflation takes the heat out of Fed interest rate expectations while current account data contains provisos
- Increase in shipping volumes delivers good news for Fedex
- China hasn’t reached the point to cut interest rates says PBOC advisor Chen
- Schaeuble says Europe’s economic problems are not down to supply or demand issues
- Obama discussing legalities of US oil exports ban could be a watershed moment
- Scottish poll time – Panelbase poll shows 52% “No” 48% “Yes”
- Scottish independence polls – IPSOS poll 51% “No” 49% “Yes”
- When good publicity goes bad
We’ve had quieter days
In the run up to the FOMC it was all about the language. Late to the Fed picture was inflation and current account data and a last chance perhaps to grab a decent level or two before the big event. While the current account deficit shrunk it came with possible re-worked calculations. CPI came in softer and that looked to take some sting out of the bullish impetus. It wasn’t to be and the 12 odd pips dip to 107.14 in USD/JPY was soon hoovered up and off we went back to the highs. That marked the session low and the current price of 108.30 should tell you all you need to know about how the FOMC went. The bulls we’re expectant and Yellen felt no need to pull the rug out from under them.
The words were the same but but there was a hawkish shift within the statement with more dots coming together in agreement on rates. Plosser was joined by Fisher in the dissenting room and though he’d be the banker to do that anyway, it added to the fire lit beneath USD/JPY.
The question for the buck now is whether it is finally happy with what it’s been expecting for so long and we fall into consolidation mode. The jury is still out but I reckon we’ll have a better clue come the end of tomorrow.
As you would expect, the aimlessly wandering EUR/USD bent over and took a dollar boot up the ass which kicked it down to 1.2850 after Yellen has signed off. The bounce since back to 1.2870 doesn’t look promising but with the first ECB TLRTO coming online tomorrow anything can happen.
The pound was almost sedate in it’s moves but after riding the increased Scottish “No” vote sentiment to 1.6358 (closing the gap) we gave some up as the realisation that things may still be in the balance. Not even two late polls favouring the No’s could rally the pound again as poll fatigue set in. The worry with the poll was the narrowing of the split which is likely to add even more of an edge to what is going to be an edgy day anyway.
AUD/USD completely washed out any thoughts of PBOC stimulus and joined the euro in bending over for the almighty US dollar. 0.9000 is gone good and proper and the only question is how far do we drop. 0.8951 marks the low so far.
US stocks finish the day mildly in the green with the S&P +2.59 at 201.57, the Dow is at 17156, +24.88 after smashing it’s way to new all time highs all day. 17221.11 is the new record. The Nasdaq finishes up 9.42 at 4562.18.
US bond yields go out on the highs as they decide that they’re happy with events from the Fed 10’s get you 2.61%, +2bps, just shy of the 2.62% highs.
That’s your lot from me today and I hope we’ve steered you right today. Eamonn is now here to guide you through the minefield of the Asia session so if you had your tin hat on for the FOMC you might want to leave it on
Back to normal tomorrow and the next round of fun and frolics from the UK/Scotland/SNB/ECB/US and whatever else gets thrown at us.
Thank you for your time and good night.
