FEDERAL RESERVE HIKE INTEREST RATES BY 25 BASIS POINTS

US RATE HIKE

The US Federal Reserve increased interest rates by a quarter-point this week but lowered its projections for future US rate increases. The twenty-five basis point increase brings the US rate of interest to 2.50 per cent, marking the fourth rate increase by FOMC policy makers this year. The central bank lowered its projections to two rate increase next year, instead of the three rate increases previously forecasted. The initial market reaction saw the US dollar index strengthen, US bond-yields tumble and global equity markets drop, as traders feared that the rate increase might hurt the United States economy and global growth.

• The EURUSD pair is only bullish while trading above the 1.1400 level, key resistance is found at the 1.1470 and 1.1530 level.

• If the EURUSD pair continues to trade below the 1.1400 level, sellers may test towards the 1.1330 and 1.1360 support levels.

CRYPTOCURRENCY RELIEF

The broader cryptocurrency market finally started to move higher this week, after incurring weeks of heavy technical selling. Bitcoin made strong gains above the $4,000 level, after establishing a near-term price floor just above the $3,100 level. The BTCUSD pair added over thirty per cent to its market value in a two-day buying frenzy, as the number one cryptocurrency by market capitalization attracted crypto bargain hunters. Litecoin built on its former weekly gains, with the eight largest cryptocurrency by market capitalization moving above the $30.00 benchmark and also adding an impressive thirty per cent to its market value.

• The BTCUSD pair is only bullish while trading above $3,600 level, further upside towards the $4,400 and $4,800 levels now seems possible.

• If the BTCUSD pair moves below the $3,600 level, price could fall back towards the $3,500 and $3,300 levels.

LOONIE FALTERS

The Canadian dollar fell to its weakest trading level against the greenback since June 2017 this week, as Oil prices tumbled over US government forecasts for the growth of shale oil production and the ongoing Sino-US trade controversy. WTI Oil tumbled below the $50.00 level this week, causing the USDCAD pair to move above the 1.3500 level. The Canadian economy also posted much weaker than expected inflation data this week, putting further pressure on the Canadian dollar in the foreign exchange market.

• The USDCAD pair is bullish while trading above the 1.3385 level, further upside towards the 1.3530 and 1.3650 levels seems possible.

• If the USDCAD pair moves below the 1.3385 level, sellers may test towards the 1.3310 and 1.3265 support levels.

POUND FIRMS

The British pound recovered higher against the US dollar this week, due to US dollar weakness and key Brexit decisions being pushed back until the start of next. The Bank of England meeting saw the MPC voting unanimously to keep interest rates unchanged at 0.75 per cent. The Bank of England monetary policy statement saw policymakers talking up United Kingdom inflationary pressures and the chances of a no-deal Brexit. The GBPUSD pair briefly moved above the 1.2700 level, after starting the week below the 1.2600 level, although the British pound remained weak against the euro, with the EURGBP pair trading towards the best levels of 2018.

• The GBPUSD pair is only short-term bullish above the 1.2700 level, key resistance is found at the 1.2770 and 1.2880 levels.

• If the GBPUSD pair moves below the 1.2700 level, further selling towards the 1.2600 and 1.2528 support levels remains possible.

YEN DEMAND

The Japanese yen made strong gains against the US dollar this week, with the yen currency benefitting as investors sought perceived safe-haven currencies. The USDJPY pair tracked global equity markets move lower, as US and Asian stocks fell over increasing concerns about the slowing global economy. The Bank of Japan policy meeting largely proved a non-event, with the central bank downgrading 2019 GDP forecasts and reiterating their commitment to reaching the BOJ’s two per cent inflation target.

• The USDJPY pair is bearish while trading below the 112.20 level, key support is found at the 111.00 and 110.50.

• If the USDJPY pair trades above the 112.20 level, buyers may test the 112.70 and 113.20 levels.