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Following on from my potential trade idea yesterday, US data was actually fairly robust, with better-than-forecast initial jobless claims, Philli Fed manufacturing and existing homes sales.
Surprisingly, we saw US bond yields actually fall (with traders buying bonds), which you would not expect when economic data is above consensus. With this in mind, it seems traders were more focused on positioning portfolios ahead of Janet Yellen’s speech on the labour market at midnight (AEST) tonight.
I feel the market is expecting dovish rhetoric from Federal Reserve chairman Janet Yellen. She will therefore need to go above and beyond to really cause a sustained reversal in the USD. However, given the potential she does say something to cause a significant change of fortunes, I’m going to adjust my stop loss to 103.18 – just below the former top of the channel, as shown on the four-hour chart.
I am going to attach a profit target at 104.30 in case there is some increased volatility tonight.