FOREX: USD Index Still Driven by Speculation Over Make-Up of FOMC
Aug-07 19:43
- Price action in the USD Index remained dominated by speculation over Fed leadership. Reportedly, Trump advisers are pushing for current FOMC member Waller to lead the Fed after Powell's departure. The headline helped trigger some USD positive moves given Waller's relative credibility and insider knowledge of the Fed relative to Kevin Hassett - who argued for a Greenspan-like approach to rate-setting earlier this week.
- Later in the session, CEA Chair Stephen Miran was touted to take Kugler's place on the Fed Board of Governors. Miran, an Oval Office insider who has backed the President on trade deals, US economic dominance and the benign inflation backdrop - prompted a minor spell of USD weakness, aiding EUR/USD to head into the close either side of 1.1650.
- GBP shot higher against all others in G10 into the Thursday close on the back of the BOE rate decision. While the bank voted to cut rates by 25bps - as expected - there was more opposition among the committee for easing than expected and, for the first time, the vote on policy went to a second round after an initial failure to reach consensus. The unexpected opposition to cutting rates today proved a surprise for markets, and prompted UK rates to price out the odds of further easing through year-end.
- November BoE rate cut odds dropped below 50%, and another 25bps easing through year-end is now less than fully priced. As a result, GBP surged through 1.34 against the USD, narrowing the gap on the 50-dma in the process. This leaves prices still well below the late July highs of 1.3589, let alone 1.3789, the YTD high. With the September BoE unlikely to deliver any policy change, this leaves the Autumn budget as the next major UK macro event - particularly as estimates this week showed the UK Treasury with considerably less wiggle room on debt than previously expected.
- Focus Friday turns to unemployment rate data from France and the Canadian jobs report for July. Central bank speakers include Fed's Musalem and BoE's Pill.
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AUDUSD TECHS: Trend Needle Points North
Jul-08 19:30
- RES 4: 0.6700 76.4% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 3: 0.6688 High Nov 7 ‘24
- RES 2: 0.6603 High Nov 11 ‘24
- RES 1: 0.6590 High Jul 01
- PRICE: 0.6526 @ 16:46 BST Jul 08
- SUP 1: 0.6486 Low Jul 07
- SUP 2: 0.6472/6373 50-day EMA / Low Jun 23 and a reversal trigger
- SUP 3: 0.6357 Low May 12
- SUP 4: 0.6275 Low Apr 14
The trend set-up in AUDUSD remains bullish and the latest pullback is considered corrective. Recent gains maintain the bullish price sequence of higher highs and higher lows, the definition of an uptrend. Note too that moving average studies remain in a bull-mode position, highlighting a dominant uptrend. Scope is seen for a climb towards 0.6603 next, the Nov 11 2024 high. Initial firm support to watch is 0.6472, the 50-day EMA.
US: Latest Social Media Posts from Pre Trump
Jul-08 19:12
- Markets ignoring latest from Pres Trump on his media platform
- TRUMP SAYS 'NOW IS THE TIME' TO CUT INTEREST RATES, Bbg
- TRUMP: CUT INTEREST RATES JEROME, Bbg
MNI: US MAY CONSUMER CREDIT +$5.1B
Jul-08 19:00
- MNI: US MAY CONSUMER CREDIT +$5.1B
- US MAY REVOLVING CREDIT -$3.5B
- US MAY NONREVOLVING CREDIT +$8.6B
