Currency Updates:
AUD/USD elicited fresh support at 0.9061 (Asia low) on two occasions during the Ldn am (to date), with 0.9078 marking the interim high. More bids are tipped at 0.9050 (Mon high & small option expiry level) and 0.9030 (Sept 12 low). There is a very large 0.9100 option expiry for today’s 10am ET NY cut (0.9113 was yesterday’s short covering-fuelled high).
EUR/USD opened in Asia at 1.2960, down from the Hilsenrath inspired climb to 1.2995 late Tuesday and continued to drift lower into Europe. Some order activity providing some direction from the early London 1.2943 low but offers back in the 60-70 area look to have slowed the recovery. The market now hunkering down ahead of the FOMC and Dollar bulls looking for any indications of a change in the Fed’s position with regard to tighter policy. Bids 1.2930-40 and offers 1.2960-70, 1.2980. Firmer EZ inflation on Aug revisions had little impact on the market and are unlikely to change the stance at the ECB. EUR/USD plays 1.2943-1.2966 on the day.
USD/JPY has traded a 107.10-107.35 range and is contained so far by the 107.09-107.37 pivot points. Offers are clustered ahead of the 107.50 barriers, this will prevent shot-term gains. The market will likely not break out of its recent range until after the looming FOMC. Note buy stops have formed above 107.50. EUR/JPY has traded a 138.79-139.19 range so far today.
Looking Ahead – Economic Data (GMT)
• 12:30 CPI (Aug) mkt 0.0% m/m, +1.9% y/y; prev +0.1% m/m, +2.0% y/y
• 12:30 Core CPI (Aug) mkt +0.2% m/m, +1.9% y/y; prev +0.1% m/m, +1.9% y/y
• 12:30 Current Account (Q2) prev -$111.2 bln
• 14:00 Philly Fed Index (Sep) mkt +23.0, prev +28.0
• 14:00 Leading Indicators Index (Aug) mkt +0.4% m/m, prev +0.9% m/m
• 15:30 Cleveland Fed Median CPI (Aug)
Looking Ahead – Events, Other Releases (GMT)
• 13:00 FOMC meeting continues (Day 2)
• 18:00 FOMC Statement – incl Summary of Economic Projections from staff
• 18:30 Fed Chair press conference
