It’s all about December
Activity in Asian currency markets was confined to tight ranges as traders await to outcome of the 2-day FOMC meeting. Market pricing implies that a 25 bps hike is confirmed but it is the outlook for December and 2019 that will be the focus. Currently rates markets are suggesting a near-80% chance of an additional hike before the end of the year. Any deviation from this outlook would have dire consequences for the US dollar.
Kiwi bounces on uptick in business confidence
It was a mixed bag of data for New Zealand today with the trade deficit widening in August while business confidence, as measured by an ANZ index, jumped in September. The trade deficit widened to near NZ$1.5 billion from just NZ$196 million in July. However, business confidence jumped to -38.3 in September, recovering from a more than 10-year low in August. The confidence data won the day and the kiwi rallied as much as 0.6% versus the US dollar. NZD/USD tested above the 55-day moving average, as it has for four out of the last five sessions, but still has to register a close above it.
NZD/USD Daily Chart
Data calendar has one major item
There’s not much to excite the European session ahead of the Fed’s rate decision so activity is likely to be confined to tight ranges. EUR/USD has struggled for momentum to take it convincingly through the 1.18 mark over the past five sessions and any extensive move through the level is likely to come from a weaker US dollar. The pair is currently trading at 1.1771.
Aside from the Fed meeting, US new home sales are likely to slip under the radar. Estimates suggest they will increase 0.5% m/m in August, reaching 630,000 units, following a 1.7% decline in July.
The full data calendar is available for viewing at https://www.marketpulse.com/economic-events/
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