The
US dollar index found support yesterday at 79.28 and bounced up ahead of FOMC statement to cap at 79.65. Market participants have priced in that the Fed would maintain asset purchases at $85B but despite that the
greenback strengthened overnight on short covering. We would also expect the Fed monetary policy to remain unchanged due to US shut down and US debt ceiling issue which has been transferred to early 2014 and we would also focus on comments regarding when it is expected to start asset tapering. Moreover, it is most likely for the FOMC statement to sound dovish than otherwise and for that reason we consider the
US dollar index vulnerable to the short side.
Yesterday the
EURUSD jumped to 1.3812 after weaker US CB Consumer Confidence as well as underpinned by ECB member Ewald Nowotny saying that ECB key rate will not be reduced and also that the central bank does not have instruments to ease strong
Euro. Although the
EURUSD dipped back to 1.3733 as traders took advantage of the recent bounce up to close in profits. It’s going to be a busy day for the
Euro today as investors will be anticipating q3 Spanish GDP data, German unemployment rate and EZ confidence data.
During Asian session the
Japanese Yen got weaker as the Japan’s Preliminary Industrial Production increased by 1.5% in September up from -0.9% in August but below expectations of 1.8% rise. The
USDJPY advanced from yesterday support line at 97.45 to currently at 98.26, backed by stronger
greenback and positive
NIKKEI 225 trading. Turning to the next main event, should the Fed refer to asset tapering before March 2014 today the dollar would surge against the
yen likely towards cap at 99.00.
On the data front except for FOMC statement during US session and EZ events we are also aware of ADP Employment Report an early indication of employment in US economy. Concerning equities, we expect earnings release for METLIFE(MET), Facebook(FB), VISA(V) and General Motors (GM).
