Bearded Ben’s Swan Song: Take a bow fella, you’ve done it your way.
He just couldn’t resist could he, the last fling before the love affair falls away like so many shattered dreams before it.
I speak, of course, of Bearded Ben. Giving a speech last night, our man Ben told it like it was and took no prisoners. In what must surely be his swan song, he sought to defend the FED’s position, justifying QE and laying the groundwork for a smooth transition to another dove in Woody Yellen. Reiterating the stance of risks and benefits of loose monetary policy, acknowledging the almost complete lack of growth within the economy, the shocking employment picture and the continued chicken/egg scenario where stable and consistent growth can only be achieved by accommodative policy… Damage done and scenario for the Greenback all but confirmed. Naturally kneejerk price action was to see the USD get sold and the likes of the EURUSD, Cable, AUDUSD and USDCHF take a hit to the better. In the case of the EURUSD and Cable and even the AUDUSD the highs sighted on the back of yesterdays China noise were respected with only the EURUSD exceeding them marginally, to now this morning be trading around 40 points lower.
The day ahead sees us waiting for the BoE minutes this morning, a raft of US data including CPI, retail and existing home sales, topped off with the FOMC minutes delivered this evening. On the latter (FOMC) I really can’t envisage a scenario where the message of recent sentiment goes too far off point and the course is steadied. That is to say, easy money, and easy does it.
With regards to levels on the major pairs today;
EURUSD: The single currency remains defiant and while the US has easy cash and the EU never will (courtesy of the Germans) simple logic dictates a stronger cross. That said, look for headwinds on the topside into 1.3580 (overnight highs), small stops above and real money sellers and size joining the party above 1.3600/10. On the downside 1.3480 should once again halt proceedings lower with some stops sat below but more buyers likely to be seen into 1.3450/30.
AUDUSD: With Debelle out last night trying to talk down the currency once more, the little battle is smalls softer this morning. However, being in a range (with an upside bias) means that 0.9350 will attract buyers once more while profit takers (sellers) are noted into 0.9430. Stops reside above 0.9450.
USDJPY: Massive expiries into 100.00 (1bn) and another 3bn at 99.50 should keep the pair relatively pinned. Sellers in size join the party into 100.30, but stops above there are bountiful too.
GBPUSD: Betty will wait for the minutes, but has a distinct upside bias for the very short term. Exuberance should be capped into 1.6180 and sellers will line up willingly between there and 1.6230. The downside should see stops mixed with buyers around the 1.6100/1.6080 area.
Helmets on and good luck out there.