USD rallies on the back of the Fed

The main theme in the FX space was greenback strength on the back of the FOMC statement. 

Source: Bloomberg

QE came to an end as many expected and the Fed offered up a moderately hawkish statement. The Fed did not make reference to global growth concerns as the market was broadly expecting, sounding more optimistic about the labour market and showing less concern about moderating inflation. However, the ‘considerable time’ reference was maintained, but analysts feel this will go in December when the Fed also releases updated projections. As far as the rate hike is concerned, the market is now firmly in the Q2 2015 camp. 

USD/JPY extends gains in Asia

With this in mind, yield firmed up and US dollar strength resumed after a period of consolidation. USD/JPY is the pair I’ve been watching closely this week and it has finally started to make a move with only a couple of days’ trading left in the week.

Yesterday I looked at positions on a break above ¥108.35, last week’s highs. This would have been triggered and the pair has since traded through ¥109.00 in Asia. There is still the BoJ meeting to go and that also has potential to move the pair significantly. Further yen weakness could see the pair retest early October highs above ¥110.00. 

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by analysts

Find out more about