Forex Signals Brief for Sep 18: Focus Turns to the FOMC
After one of the more extraordinary trading weeks of the year, where the price of oil rallied in one of the biggest moves in recent memory, the focus now gets back to the fundamentals with the latest FOMC the big event of the day.
There is wide expectation that the FOMC will continue with their dovish tilt and cut interest rates by 25bp to a target range of 1.75–2%. At the same time, we should also get an update on their forward guidance which might well prove to be more of a market mover than the actual cut itself, given that it is all but priced in. There are also many investors wondering whether improving economic data will have lowered the likelihood of further cuts.
Before we make it to the US session, there are a couple of massive releases to watch out for in Europe as well. Both the UK and Eurozone will be releasing CPI and it is interesting timing given the state of Brexit negotiations.
The UK is expecting CPI of 1.9%, which in reality is just under the target band the BOE would like to see. While in Europe, we are looking at a much more sluggish 1.0%, which has been the situation in Europe for many years.
Either way, both the the EUR/USD and GBP/USD will be active early in the European session and should provide some good opportunities post the release of both numbers.
Forex Signal Update
The FX Leaders Team gave back a few of the winners of last week with 4 signals closed out in the red.
Gold – Pending Signal
GOLD has been busy as a risk-off trade this week, but the real test might come with today’s FOMC. Gold moves heavily on any change to the USD and a cut or change to forward guidance could see some sharp moves. While $1500 is holding at the moment and our bias is bullish, be prepared to be nimble here and adjust as price action dictates.
AUD/USD – Active Signal
Our AUD/USD signal has really been back and forth in the last day of trading. At the moment, price has fought back to 0.6850 and it really is at an inflection point at the moment.
Cryptocurrency Update
BTC continues to flatline this week and there is really no change worth noting from the last 24 hours price action.
However, the other altcoins such as Ripples XRP continue to lead the market higher. There is a pending fork that has led to some upside, so it will be interesting to see if Bitcoin can follow.
Generally BTC is the leader, but at the moment, price is trapped and we are seeing more strong action in others such as Ethereum, XRP and Bitcoin Cash.
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