FOMC Enters the Spotlight

INVESTORS LOCK GAZE ON THE FED DECISION

The US dollar traded mixed against the other G10 currencies on Tuesday and during the Asian morning Wednesday. It gained versus SEK, EUR, CAD, CHF, and NOK in that order, while it underperformed against JPY, GBP, and NZD. The greenback was found virtually unchanged versus AUD.

USD/JPY — TECHNICAL OUTLOOK

From around the beginning of August, USD/JPY continues to move sideways, roughly in a 180-pip range. The pair is currently resting near the lower bound of that range, at 105.20. If the sellers are able to push the rate below that hurdle, this would not only push USD/JPY outside of the range, but might also open the door to larger extensions to the downside, as a forthcoming lower low would be confirmed. However, until we see that that break, we will remain neutral.

NASDAQ 100 — TECHNICAL OUTLOOK

After a recent decline and then finding support near the 10938 hurdle, Nasdaq 100 started shifting back up again. Although it is currently trading above a short-term tentative upside support line taken from the low of September 11th, the index is still balancing below one of its key resistance areas between the 11568 and 11585 levels, marked by the highs of September 10th and 8th respectively. In order to aim for higher areas, we would prefer to see a break of the above-mentioned resistance area first, hence why we will stay cautiously bullish, at least for now.

AS FOR THE REST OF TODAY’S EVENTS

During the EU session, we have the UK CPIs for August. Both the headline and core CPI rates are expected to have tumbled to +0.1% yoy and +0.6% yoy from +1.0% and +1.8% respectively. At the latest BoE gathering, policymakers kept monetary policy unchanged, while in the quarterly Monetary Policy Report, it was noted that officials discussed the effectiveness of negative interest rates and noted that they will continue to monitor their appropriateness. What’s more, on September 2nd, Governor Bailey said that negative rates are still a tool in in the Bank’s toolbox, although they are not planning to use it at the moment. Ahead of the previous gathering, there was some speculation that the Bank may at some point decide to cut rates sub-zero, and a notable slowdown in inflation may revive such speculation.

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