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Forex Today – Asian Session: The Dollar operates mixed before the FOMC

It’s FOMC day, and it’s a busy day. During the Asian session, New Zealand will release Q2 Current Account data and Japan will report August trade data. In addition, the Westpac leading index will be published in Australia. The focus will be on the People’s Bank of China (PBoC) interest rate decision. Later, the UK will report inflation data for August and Germany will release wholesale inflation figures. During the US session, the Federal Reserve will announce its decision on monetary policy.

Here’s what you need to know on Wednesday, September 20:

An important development during the Asian session will be the People’s Bank of China’s decision on interest rates. The 1-year prime lending rate is expected to remain at 3.45% following last month’s cut.

The key event on Wednesday will be the decisions of the Federal Reserve. Market participants expect the central bank to keep the Fed Fund rate unchanged at 5.25-5.50%. The focus will be on Powell’s statement, economic projections and press conference.

Data released on Tuesday showed mixed numbers in the US real estate sector. Housing starts fell 11.3% in August, while construction permits rose 6.9%.

During the American session, the Dollar Index rose amid deteriorating market sentiment and rising US Treasury yields. The DXY bounced to 104.80 and surpassed 105.00.

The EUR/USD pair does not It managed to stay above 1.0700 and retreated, remaining within a bearish channel. The final reading of the Eurozone Harmonized Consumer Price Index stood at an annual rate of 5.2% in August, revised from the preliminary 5.3%. Germany will report the August Producer Price Index on Wednesday, with the annual rate expected to decline from -6% to -12.8%.

USD/JPY posted its highest daily close since November, but remains below 148.00. Japan will release August trade data on Wednesday.

USD/CHF rose again and reached monthly intraday highs, but still unable to break above 0.9000. The Swiss State Secretariat for the Economy (SECO) will report on its autumn 2023 economic forecasts. On Thursday, the Swiss National Bank is expected to announce a rate hike of 25 basis points, to 2%.

GBP/USD failed to hold above 1.2400 and retreated, staying close to monthly lows. UK inflation will be reported on Wednesday. The annual rate of the Consumer Price Index is expected to increase from 6.8% to 7.1%. This figure could strengthen the chances of a rate hike by the Bank of England, which will announce its decision on Thursday.

The Canadian Consumer Price Index rose 0.4% in August, beating the market consensus of 0.2%. The annual rate rebounded from 3.3% to 4%. The Canadian Dollar (CAD) reached a high following the announcement, but then retreated. USD/CAD lost ground and touched monthly lows at 1.3380, but ended away from the low around 1.3440.

TD Securities on inflation in Canada:

Today’s report leaves the Q3 CPI well above July CPI forecasts and will increase the Bank of Canada’s concern about persistent price pressures. We’ll still have one more report on inflation before the BoC’s October meeting and a softer growth outlook will allow the Bank to look through some of this persistence, but today’s report should help reaffirm that the mission is not yet accomplished and the next meetings are still alive for another rise.

The NZD/USD pair broke above the 20-day simple moving average and recorded a daily close above 0.5900. Current indicators show a modest short-term bullish bias. New Zealand’s Q2 Current Account data will be released on Thursday, along with Q2 GDP data.

The AUD/USD pair tested the resistance zone around 0.6470 but failed to break higher. It maintains a mostly bullish bias heading into the Asian session. The Westpac leading index will be published on Wednesday.

Precious metals lost ground during the American session, driven by the strengthening of the Dollar. Silver fell to $23.20, while Gold fell to $1,930.

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Source: Fx Street

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