FOMC STATEMENT IS LIKELY TO TRIGGER POWERFUL MOVES
The price of the common currency is consolidating today in anticipation of the FOMC statement on monetary policy at 18:00 GMT. While an interest rate hike in the US is not expected at this meeting of the Committee, the rhetoric of Fed chairwoman Janet Yellen may lead to significant moves of the EUR/USD quotes. In case of hawkish rhetoric, the price is likely to move further down. Good news for the greenback came today from the ADP employment growth of 235,000 in October against the 200,000 expected. This was shortly followed up by positive construction data that showed construction spending had increased to 0.3% against the 0% expected. Construction plays a key role on the state of the US economy. The only sour note in this afternoon’s data for the US was in the less than expected ISM manufacturing data that was reported at 58.7 versus the 59.5 expected. Volatility is likely to increase during the week due to the Fed’s statement and the market’s reaction to it and the NFP jobs report due to be released on Friday.
The British pound is rising in anticipation of the release of the statement of the Bank of England on monetary policy tomorrow. The main focus will be on further plans of the British regulator regarding the tightening of monetary policy.
The NZD/USD was supported by strong labour market data according to which the unemployment rate in New Zealand fell by 4.6% in the third quarter which is 0.1% below the expected figure and growth of employment of 2.2%. The positive impulse was short lived and the decline is expected to resume.
The USD/JPY keeps rising despite positive news from manufacturing PMI growth in Japan by 0.3 to 52.8 in October. Traders are also waiting for the consumer confidence data in Japan that will be released tomorrow morning, but its impact will be restrained by more important news from the US.
The EUR/USD is moving around the important 1.1620 level and the rise of volatility is highly anticipated after the end of the current consolidation. The fall within the descending channel is possible to its lower boundary and the psychologically important 1.1500 mark. On the other side, positive moves are likely to be restrained by 1.1730.
The GBP/USD is trying to gain a foothold above the upper boundary of the descending channel and the important 1.3250 line. In case of success the closest targets will be at 1.3400 and 1.3600. On the other hand, the pound may retreat down on the background of fixing positions after strong growth and ahead of important events.
The USD/JPY was able to reach the inclined resistance line and may continue to move upwards along it to the closest objective at 114.70, and overcoming it may become a trigger for further price increases up to 116.00 and 117.70. The RSI on the 15-minute chart is in the overbought zone which points to a potential price correction to the SMA100.