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BK Big Trades – 2 New Post FOMC Orders
Place Order to Sell 1 Lot USD/CAD at 1.3127
Place Order to Sell1 More at 1.3280
Stop for ALL 1.3480
Place Order to Sell 1 Lot EUR/USD at 1.1470
Place Order to Sell1 More at 1.1670
Stop for ALL 1.1790
We are laying out 2 Big Trade orders post FOMC. The Federal Reserve left interest rates unchanged today, citing uncertainty abroad and slightly softer inflation, which is bearish for the U.S. dollar but as Yellen indicated, recent developments have not fundamentally altered their outlook for the U.S. economy. She said every meeting is a live meeting and an unscheduled press conference could be held in October if needed. We don’t believe that will happen but December remains a strong possibility for a hike. We like selling USD/CAD in the near term because the lack of a rate hike could cause additional weakness in the dollar and lift oil prices. This “risk on” sentiment should drive USD/CAD to 1.3000 especially if Friday’s CPI report surprises to the upside like we anticipate. We like laying out orders higher to sell EUR/USD because ECB officials continue to talk of the possibility of more QE, which should limit the gains in the single currency.
NY Open 4 Minute Update
Dollar Pushes Higher Post FOMC
Tomorrow all eyes will be on the FOMC meeting which promises to be the marquee economic event of the week. The key question for the market is whether the Fed will hint that its ready to hike rates in September or delay any action until December.
The economic data has been mixed with labor numbers continuing to impress, but wage growth and consumer sentiment lagging. In fact today’s consumer sentiment drop was one of the steepest in recent memory and bodes poorly for future spending. That’s why the market is at a standstill and nowhere is that reflected more clearly than in USD/JPY which has been ranging between 123.00 and 124.00 for the better part of this month.
If the Fed does signal a willingness to hike the pair could snap out of its slumber and take out the key 125.00 level on it way to retest the recent swing highs. On the other hand if the Fed continues to equivocate than USD/JPY could tumble towards 122.00 as speculative long bail out of the pair