The USD has caught a bid again after the release of the FOMC minutes last night with some nice supply zones getting sold across the majors.
The FOMC meeting minutes from March showed that the rate raising process was ready to begin, but not everyone is in agreement as to when. Just keep in mind that this is old news and we’ve had weaker labour force numbers in the meantime.
Here’s what Barclays had to say after the release:
The minutes from the March FOMC meeting did not shine much new light on the committee’s thinking.
A large majority of FOMC participants see rate hikes coming in late 2015 (e.g., September to December), and the subsequent pace of rate hikes is likely to be gradual.
We view September as the likely timing for the first rate hike.
Put simply, the timing of the Fed’s first rate hike stays highly data dependent and we still have a lot more of the narrative to play out yet.
Another interesting piece of news this morning is an announcement that China will introduce a nationwide subsidy for local iron ore producers. As we’ve been speaking about, slumping iron ore prices have heaped pressure on the AUD and any increase in global supply could be a further drag on the Aussie.
With Local Chinese iron ore mines accounting for around 20% of China’s demand, it’s not the end of the world, but it heaps more financial pressure on an already struggling Australian sector.
On the Calendar Today:
In terms of news releases, Today’s Asian session will be very quiet. Look for the market to continue to digest the FOMC minutes before we move into the Bank of England tonight.
GBP Official Bank Rate
GBP MPC Rate Statement
CAD Building Permits
USD Unemployment Claims
Chart of the Day:
With the Bank of England Bank Rate and Rate Statement tonight, lets take a look at the GBP/USD.
GBP/USD 4 Hourly:
Click on chart to see a larger view.
From a technical analysis point of view, I’m all about keeping charts clean and trading ideas simple. Identify your key support/resistance levels where you think that buyers or sellers will come in and use those levels to manage your risk around.
The GBP/USD 4 hour chart is a perfect example of how you can use a simple, single zone to play from the short side with relatively low risk.
Any weak price action heading into a zone like that gives an opportunity to sell. Alternatively, the interesting thing about this chart is that price is also putting in higher lows, forming a bit of an ascending triangle.
Play the obvious levels while they’re there and watch for the breakout.
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