Federal Reserve in focus

The Bank of England minutes and the Federal Reserve meeting will ensure an interesting trading session, while Greece still hangs over the market.

Federal Reserve
Source: Bloomberg

Sterling awaits BoE minutes

The pound is still pushing higher against the dollar, and today’s trading session will be see increased volatility as the BoE will release its minutes at 9.30am (London time) while the Fed announcement is due at 7pm (London time).

The market is expecting no change to the voting breakdown for both the interest rate decision and the size of the bond buying scheme, and we expect to see 0-0-9 across both. The UK has rebounded from deflation, and that that has lifted the weight off of GBP/USD, but the US is still leading the interest rate race.

The currency pair has been in an upward trend since mid-April, and the crossing over of the 50-day moving average over 100- and 200-DMA adds to the bullish sentiment.

The target is $1.58, and any pullbacks will find support in at $1.5545.

Euro still ignoring Greece

EUR/USD is still shrugging off the problems in Greece unlike the equity markets, and there seems to be an attitude where it would be beneficial to the single currency if Greece was to leave the currency union. We are still nowhere near an agreement between Athens and its creditors, and it appears traders are only interested in a positive news headline from the discussions.  

The Fed is expected to keep rates to hold tonight, but the focus will be on the language and dealers will try and determine when interest rates will start to rise in the US. Some traders are penciling in September for a rate rise, while others are looking to 2016. The Fed has been deliberately vague over when it will move away from ultra-low rates, and the market is anticipating much of the same tonight.

EUR/USD has been moving higher since March, but the high in June failed to take out the high of May, and there is a lot of consolidation in the $1.12-$1.13 area. The bias is still to the upside, with $1.14 as the target. A drop below $1.12 will find support at $1.10.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.