Choppy trading ahead of FOMC decision and US GDP data

Wednesday, April 29, 2015

Asian markets mimicked the choppy session on Wall Street as a string of weak corporate earnings prompted investors to take profits. Investors on the whole have adopted a more cautious approach ahead of the release of US Q1 GDP figures later this afternoon as well as the FOMC rates decision any accompanying press release, hoping to glean further details on the eventual Fed decision to increase interest rates. The dollar index headed lower for the fifth straight session yesterday, its longest losing streak since April last year as it hit a two month low towards 96.011 as investors weighed up the timing of a rates rise.

The euro made notable gains against the USD despite a lack of macroeconomic drivers. The euro managed to breach resistance at the 50 day MA, rising for a fourth straight session towards 1.0991 against the dollar as weaker US economic data ahead of the FOMC decision rather than stronger eurozone data saw flows reverse direction. Gains early on this morning seem to be stymied by firmer resistance towards 1.1000 but eurozone investors have received a shot in the arm after Greek PM Alexis Tsipras reshuffled the team negotiating the bailout with a conclusion anticipated in the coming week.

The pound sterling extended its march on the USD for the sixth straight session, having rallied higher in 11 out of the last 12 sessions. Sterling built on support at the 100 day MA despite weaker than expected Q1 GDP data, which saw the economy expand by 0.3% q/q, lower than the 0.5% q/q expected by market participants. In spite of this tepid data, sterling has extended gains early on this morning towards 1.5375 and provided confidence continues to build in the UK economy we could see GBP revisit year-to-date highs towards 1.5500.

DXY sells off ahead of GDP data and FOMC decision

DXY Curncy DOLLAR INDEX SPOT 2015 04 29 07 42 39

GBP extends gains against USD

GBP Curncy British Pound Spot 2015 04 29 07 52 54

Events for today

JP Market Holiday 

0700

DE

May

GfK Consumer Confidence

0900

DE

Apr

CPI

1000

EZ

Apr

Bus Climate & Con Sentiment

1330

US

Q1

Personal Consumption & GDP

1500

US

Mar

Pending Home Sales

1530

US

w/e

EIA Energy Stocks

1900

US

Apr

FOMC Rate Decision

Topics: GDP, US Fed, USD, EUR, GBP
More from: Kash Kamal