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Buying USD on pullbacks | Current Sentiment
Buying USD on pullbacks against weaker currencies looks like a good plan for the session after yesterdays Fed event. The JPY and the CHF appear to be particularly attractive while equities indexes continue to rally. However, it is also important to recognize that trading volumes could begin to lighten as we approach the end of the week and the holiday break.
Current Sentiment:
The main event during NY was the FOMC rate decision where the Federal Funds target rate was lifted by 25 basis points for the first time since 2006, as was widely expected. The accompanying statement was relatively upbeat focussing on the marked improvement in the labour market. The Committee plans to assess incoming information with regards to future hikes. The Fed’s forecast for interest rates in 2016 were unchanged while 2017 predictions moved slightly lower. The USD initially strengthened upon release but then weakened heading into the press conference. After the press conference the greenback once again found its footing as the main point to be taken from the event is that the Fed has launched the much anticipated process of normalization, and pointed to further future hikes upcoming assuming the current economic situation continues to stay on track, and more specifically, inflation starts to pick up.
During Asia the New Zealand GDP print for Q3. GDP production for the quarter came in basically in line at 0.9%, as did the annual print at 2.3%. The expenditure measure of GDP increased 1.2%, better than expected and matching the high analyst estimate.
Coming up during London we have the German Ifo Business Climate, and UK Retail Sales. These releases were covered in the weekly risk events video. You can watch it here.
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