Muted FOMC Meeting
The US dollar has been a little softer so far over the European morning on Thursday. Last night, the Fed kept rates on hold as expected at its first FOMC meeting of the year. The statement was broadly unchanged from last time around with the Fed noting that their current monetary policy stance is appropriate though it will continue to monitor incoming data. USD index trades 97.84 last, still holding above the broken bearish trend line for now.
EURUSD Holds Support
EURUSD has been a little firmer today in light of the weakness in USD. EURUSD has been stalled at the 1.10 support level now (third day so far) and with little on the slate today, we are unlikely to see any strong moves. However, Eurozone CPI tomorrow could be decisive in helping EUR recover further, or sink below the level.
Will BOE Cut?
GBPUSD is the main focus today with traders divided over whether the BOE will cut rates. Recent dovish commentary from the BOE has fuelled a rise in easing expectations, further encouraged by weak data and now, the outbreak of corona-virus. However, economists and industry experts are divided. Consequently, there is plenty of room for volatility in GBP today. GBPUSD trades 1.3070 last.
Risk Assets Still Weak
Risk assets have been broadly lower again over the last 24 hours though are currently doing their best to recover the day’s losses. The SPX500 has traded back up to 3253.13 last, from the day’s lows of 3240.63. Risk sentiment is still weighed on by rising uncertainty around the coronavirus outbreak which has seen equities firmly lower this week.
JPY Lower, Gold Higher
Safe havens have had a choppy start to the day. The Japanese yen has been a little lower against USD, while gold has been higher (though gains are fading). Despite the pullback mid-week in safe havens, moves have since reversed. XAUUSD trades 1580.04 last, heading back up towards the week’s highs. USDJPY trades 108.92, just off the week’s lows.
Crude Lower on Bearish EIA Report
Oil prices have been sharply lower again today, extending declines seen across the week. Yesterday, the EIA reported a bigger-than-forecast rise in inventories with crude stores jumping by 3.5 million barrels. The increase has put further focus on demand-outlook fears in response to the corona-virus outbreak. Crude trades 52.36 last, heading down towards the 52.17 support level.
Loonie Breaks Resistance
USDCAD has been higher again today. The sharp sell-off in crude prices has seen CAD weighed down with USDCAD breaking out above the 1.3207 level to trade 1.3221 last. Canadian GDP tomorrow will be the main domestic data focus of the week, expecting to print 0% last month.
Aussie Slide Deepens
AUDUSD continues to trade heavily to the downside. Despite better than expected CPI data earlier in the week, the market is pricing in a February rate cut which is keeping Aussie weighed down here. AUDUSD trades .6729 last.