(04/11/19) FOMC Fails to Frighten Forex Traders

FOMC minutes puts a potential 2019 increase back on table, but market has none of it says Bill Baruch, President of BlueLineFutures.com.

Wednesday’s FOMC Minutes proved to be a bit of a snoozer for price action. However, there were some good tidbits such as some members left open the door to raising rates later this year if the economy improved. While exuding data dependence, some members seemed to believe the economic slowdown would prove to be transitory. While this is completely different from the statement, the masses seemed to have priced in no more increases, and a chance of a rate cut later in the year.

On the heels of March CPI coming out lower than expected this morning the odds of a Fed rate cut this year—as measured by the Fed Funds futures — increased from 50.3% to 55.4%. The core monthly read came in at +0.1% and the year-over-year read was 2.0%.

The British pound led gains against the dollar today after a slew of strong economic indicators. GDP, Manufacturing Production, Industrial Production and Construction all beat. The Euro whipsawed after the ECB left policy unchanged and was negative on growth as expected. Price action lost half a penny before clawing back to unchanged by the second half of the session. The buildup is now for the results of an emergency meeting in Brussels to extend the Brexit deadline.

The Aussie matched the pound stride for stride with gains beginning overnight on stronger Westpac Consumer Sentiment and comments by the Assistant Reserve Bank of Australia Governor. Strong commodity price action, favorable risk-sentiment and progress on the ‘enforcement’ issues in the U.S.-China trade talks all provided a tailwind through U.S hours. Price action in the yen and Canadian dollar was less enthusiastic. The yen traded higher but faces strong overhead resistance while the loonie is tethered to its neutral zone.

Tonight, we look to Chinese CPI and PPI reads. Tomorrow morning, regional CPI is released from Europe, PPI and Jobless Claims from the U.S and New Housing Price Index from Canada. The highlight of the morning will be comments from a trio of 2019 voting Fed members; Governor Clarida at 8:30 am CT, NY President Williams at 8:35 and St. Louis Fed President Bullard at 8:40. Later in the day, Fed Governor Quarles speaks at 10:50 am CT, Minneapolis Fed President Kashkari at 1:00 pm CT and Fed Governor Bowman at 3:00 pm CT. There is a 30-year Bond Auction at noon CT.

Euro (ECM)

Still stalling at first key resistance. Upside could quickly be 1.1362 though. Strong support below.

Bias: Neutral

Resistance: 1.1332-1.1337**, 1.1362***, 1.1395*, 1.1412-1.1428**, 1.1480**, 1.1522-1.1549***

Support: 1.12455-1.12695**, 1.11845-1.1213***

Yen (JYM)

Bias: Neutral

Strong resistance at .9064-.90785. Should prove to be a decent fade on this first test.

Resistance: .9064-.90785**, .9109-.9130**, 91815***

Support: .9108-.9109***, .8919-8931***

Aussie (ADM)

Trying to breakout. Bullish above .7130