Fed Taper Confirmed, BoE Takes the Torch

USD Gains After FOMC Signals QE Tapering by Year End

The US dollar traded higher against all but one of the other major currencies. It gained the most versus JPY and CHF, while it lost ground only against CAD.

EUR/USD — Technical Outlook

EUR/USD traded lower as soon as the FOMC decision was released, breaking below the 1.1700 zone, marked by Monday’s low. That said, the pair failed to hit the 1.1665 territory, marked by the lows of August 19th and 20th, and rebounded somewhat. In any case, it is still trading below the downside resistance line drawn from the high of September 3rd, and thus, the short-term outlook remains negative in our view.

Will the BoE Hint at Interest Rate Hikes Next Year?

Today, the central bank torch will be passed to the SNB and the BoE. The SNB is widely expected to keep its policy unchanged and maintain its dovish stance, repeating that the Swiss franc remains highly valued and that they remain ready to intervene in the FX market when deemed necessary.

GBP/AUD — Technical Outlook

GBP/AUD traded higher on Wednesday, but hit the upper end of a possible falling wedge formation that’s been containing the price action since Monday, and then, it pulled somewhat back. Overall, falling wedges tend to be bullish formations, but until the exit out of the pattern happens, we prefer to hold a flat stance.

As for the Rest of Today’s Events

Besides the SNB and the BoE, we will also get the preliminary PMIs for September from the Eurozone, the UK, and the US. In the Eurozone, both the manufacturing and services indices are expected to have declined somewhat, to 60.3 and 58.5, from 61.4 and 59.0 respectively, which will take the composite index slightly down, to 58.5 from 59.0. Despite the slowdown, this will still reflect a decent pace of expansion, and thus, we don’t expect such results to weigh on the euro. That said, deeper declines could raise questions as to whether the recovery seen after the reopening has reached a ceiling, and perhaps push the common currency lower. No forecast is available for the UK prints, while in the US, the manufacturing index is expected to have inched up to 61.5 from 61.1, and the services one to have ticked down to 55.0 from 55.1.

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