Dollar rallies post-FOMC

USD/JPY and JPY crosses were bid early. USD/JPY was in the lead and provided direction as has been the recent wont. Up modestly to 119.01 early and adding to gains from 116.30 yesterday and 115.56 Tuesday, it fell back. Large/so-so large vanilla option expiries from 119.00 ($571 mln) provided headwind and reason for recent longs to book profits. More expiries are eyed at 119.25 (600), 50 (667), 80 (1.2 yard) and a “mother lode” at 120.00 (5.034 yards) today. USD/JPY initially fell to bids at 118.50-60 before another leg to 118.39. The last push down was on AUD/USD gains and a generally heavy USD. Conditions were thin. EUR/JPY and GBP/JPY traded similarly, off from early Tokyo highs of 146.71 to 146.22 and from 185.29 to 184.53. AUD/JPY was bid throughout, up from 96.15 very early to 96.68. NZD/JPY was better bid too, up from 91.10 very early to 91.54 and retracements limited to 91.17. With the Fed moving “a considerable time” from its statement and seen likely to begin hiking from mid-’15, USD looks to remain bid well into next year.

EUR/USD opened in Asia at 1.2342 after a volatile overnight session. A dovish initial take saw it up from 1.2390 to 1.2475. A more hawkish take at FOMC Chair Yellen’s press conference saw it plunge to 1.2320. EUR/USD steadied in Asia again as has been the recent wont, stuck between 1.2420-48 and just above last night’s low. The market as a whole has yet to price in a more aggressive Fed, and this should continue to pressure EUR/USD into year-end and especially given expectations of ECB QE sometime in early ‘15. Support is eyed ahead of 1.2300 and around 1.2250.

GBP/USD saw some light buy-backs after the plunge to 1.5539 overnight. Asia saw it up modestly from 1.5564 to 1.5593 in thin trading. EUR/GBP was immobile between 0.7917-24.

USD/CHF fell back from an early high of 0.9747 to 0.9722 a la USD/JPY. EUR/CHF went nowhere, holding at 1.2009-10.

AUD/USD opened in Asia at 0.8125 and pressed higher from late New York and early lows of 0.8107 and 0.8117 to 0.8163 before easing. Sellers were nowhere to be found after yesterday’s moment of reckoning through 0.8200 option barriers and stop-loss run down. The overall bias remains down with many eyeing moves to and possibly below 0.8000 next year as USD moves higher still.

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