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10-Year T-Note Decimalised
All eyes now fall on the FOMC meeting (05:00 AEDT) and Janet Yellen’s first press conference (05:30 AEDT). With all the recent attention on China and Eastern Europe, US monetary policy gets its turn in the limelight. The market thoroughly expects the Fed to lose its current guidance for putting the Fed funds rate (the Fed’s interest rate), and I would expect them to change this to a qualitative-based approach rather than having an absolute figure to focus on. A failure to change this guidance should see prices on the 10-year bond fall heavily. We could see changes to its economic projections as well.
All eyes today are on the March 7 high and 200-day moving average at 0.9133 and 0.9149 respectively. The 200-day moving average is a level the pair has been above since April 2013 and could represent a stronger push high over the coming weeks, potentially up to the 50% retracement of the October to January sell-off at 0.9208.
If I’m going to be long the AUD against any pair right now it has to be the CAD. Price action is very positive and I am eyeing 1.0288 and potentially 1.0353 in this move higher. The CAD was in fact the big G10 currency mover and with the RBA unlikely to move anytime soon, this pair should continue to be bought on dips, for a longer term move higher. Bank of Canada Stephen Poloz told the market that he was looking at potentially cutting rates overnight, due to the poor weather of late and this was the green light to sell CAD. Right now central banks are running the financial markets completely and when you see a central bank being this dovish, traders act.
At 10:50 AEDT we get the latest trade data from Japan and while USD/JPY threatens to break key support at 101.20, the market could find buyers if we see an improvement in the trade deficit. An improvement is expected, with the deficit expected to narrow to ¥600 billion, thanks largely to an improvement in exports which of course is positive for Japan’s economy.