Hawkishly doveish for the FOMC tonight
Well, shock horror, another UK data print and another mischievous round of price action in the Cable (this time about 15 minutes before the release). Needless to say the unemployment print was better than market consensus and those that got the nod, were sitting long and pretty into it. With unemployment now sitting at 7.4% and edging ever closer to the BoE’s 7% threshold (forward guidance lingo for meaningless line in the sand) the Cable understandably sits strong and continues to wipe out short term stops. Offers now from Sovereign names are heard into the 1.6365/70 area, but at this rate and with EURGBP looking rather ineffectual there is the distinct possibility they get chewed. Having said that though, anything above 1.6400 becomes rarefied air (for now).
On the agenda today as we all know by now is the FOMC decision, and quite frankly the sooner it’s over with the better as far as I’m concerned. I’m not bothered whether they taper this month or next or in 6 months time for that matter, simply get the job done. The market is collecting splinters from its collective posterior from all the fence sitting being done about when and how much. For my 2 cents worth, not today, and not likely till Woody Yellen has warmed the chair and copped an earful of Fischer forward guidance. HSBC came out with an idiots how to guide last night about what to do if they do/don’t taper. Basically, sell USD if they’re Dovish or alternatively buy USD if they’re Hawkish. Yeah… thanks for the nod.
Once the dust settles from this morning expect a complete coma to overcome the market as more hand sitting becomes the dish of the day.
As far as levels, the EURUSD will still be trading 1.3730 by 1.3810 on the wide. The Cable as mentioned above has the impetus to head higher, but not massively from here. There will now be some stops on the downside in Betty around the 1.6320 area and buyers will resurface on that cleanout into 1.6300/1.6290.
The USDJPY is a victim of over $25 billion of option expiries between now and Christmas all of which are centred around the 102.80/103.50 strikes.
And finally EURGBP will find buyers into 0.8380.
Short and sharp today folks as I need to run, but as always, helmets on and good luck out there today/tonight.