The USD was stronger leading into the 7am of the FOMC minutes and has lost a little ground following their release.
The minutes highlighted the “close call” nature of the September decision and shouldn’t change market expectations that a December hike is highly likely, barring some sort of shock.
Maybe it was a case of buy the rumour, sell the fact, but after a quick glance of the minutes we can’t see any “news”.
It was all quiet on the western front ahead of the minutes of the FOMC’s September meeting. The USD continued to push higher, reaching a 7-month high on various indices. There were few data releases to drive markets.
The US JOLTs report showed the number of job openings plunged 6.7% in August, well below consensus, but these numbers had been very strong over recent months so nothing should be read into the drop. There was little new from Fed Vice-Chair Fischer’s “fireside chat”. He repeated his view that the Fed can be gentle as it removes monetary accommodation.
NZD has traded in a tight ½ cent range since Tuesday afternoon, reaching a low of 0.7045 early this morning after trading as high as 0.7095 ahead of yesterday’s local market close. Following the FOMC minutes, the NZD is back up to 0.7080. The technical picture remains negative – BNZ’s momentum model went short NZD over a week ago at 0.7220, however there is strong technical support at 0.6950. Barring a shock, we think that the NZD can consolidate in the low 70s.
NZD/AUD continues to test fresh lows. It got down to around 0.9315 early this morning, but currently sits a little above its 200-day moving average of 0.9330.
During yesterday’s local trading session, GBP spiked higher, from 1.2110 to 1.2280 after reports came through that PM May had accepted that Parliament should be allowed to vote on her plan for taking Britain out of the EU. It has managed to sustain much of that gain but it was another reminder of the volatility of GBP, with heightened short-positioning and the uncertainty around the future of the UK.
JPY was the weakest major currency, trading close to 104.50 this morning on no fresh news. USD/JPY subsequently fell to 104.20 following the FOMC minutes.
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