Forex Signals Brief for June 19: All Eyes on Jerome Powell
Rowan Crosby • 2 min read
The day we have all been waiting for is finally here, as the FOMC will today release both its interest rate decision and hopefully updated guidance on what to expect from monetary policy going forward.
There has been an air of expectation that the Fed would move to cut rates. There are a few reasons for this that I touched on earlier today, but basically, Powell wants to ensure the economy will keep on growing. That comes in the face of the US-China trade wars and an economy which is a little weaker than many might like.
At the moment there is a 20% chance of a cut at this meeting, but that jumps up to 85% for July, so the odds do appear to be on the side of the doves.
Before all the action goes down in the US, the major release to watch will be UK CPI. The GBP/USD is expecting to see inflation at 2.0% YoY which is at the lower end of the target range, but not too bad in context. ECB President Mario Draghi is continuing on with his speaking engagements and after yesterday’s dovish headlines, so it is well worth paying attention for the EUR/USD traders out there.
We’ll also get a look at CPI out of Canada today, so keep a close watch on the USD/CAD during the US session.
Markets are certainly poised for some volatility today after the FOMC release, but we could be a little quiet in the lead-up. Either way, expect things to get very busy later today.
Forex Signal Update
The FX Leaders Team finished with 5 wins from 8 signals, in a strong performance from the guys in what ended up being a rather volatile and active day.
AUD/USD – Active Signal
The AUD/USD slid sharply after the RBA minutes suggested there would likely be more interest rate cuts ahead. However, price really bounced in the US session which was a bit of a shock given the focus on the FOMC today. We are short and this one is still holding on.
EUR/CHF – Active Signal
The EUR/CHF, is back to the 1.1200 level, as this signal managed to survive the onslaught of Euro selling on the back of a dovish speech from ECB President Mario Draghi. The fact this signal held on is quite bullish in my eyes, so hopefully, price can push higher from here.
BTC has continued its battle at the $9,000 level on a day when Facebook announced its much anticipated own digital currency.
Libra will be Facebook’s version of a cryptocurrency and now means the entire world (or at least those using Facebook) will have to take the entire sector far more seriously. The currency will be used for peer-to-peer transactions across its platform and both Messenger and WhatsApp and signals a big change in the way we all operate online.
What this means for all majors companies is also another interesting question. Will the big name companies simply start issuing their own currencies as well? And what does that truly mean for something like Bitcoin?
Only time will tell, but what is for sure that there will be many watching the success or failure of Libra very closely.