Some interesting price action in the markets this morning with the USD well offered across the board despite the notable weakness in US equities. Correlations in the USD and US equities have gone out the window for now and it will be interesting to see how things play out as we head into the afternoon event risk. This morning’s data out of the US showed a higher than expected CPI print and a better than forecast current account balance. In Canada, wholesale sales was much weaker, coming in at -4.2% after analysts had been looking for a -2.7% reading. The previous month was also revised lower. Sterling continues to be the weakest performer on the day following the disastrous employment data from overnight, while the Swissy, probably much to the disappointment of the SNB has been the strongest currency against the USD, up some 1.45%. Looking ahead, all eyes now turn to the afternoon event risk in the form of the FOMC rate decision at 18:15GMT. The Fed is widely expected to leave rates alone at 0.00-0.25%, with traders more interested in whether or not the central bank will introduce quantitative easing. Fed Cole is slated to testify on risk management oversight at 18:30GMT. On the commodity front, both oil and gold track lower, down some 2.15% and 2.10% respectively.
ANALYSIS OF SELECTED RATES
Eur/Usd – We are issuing a short-term sell recommendation in Euro/Dollar at 1.3180 today using ATR analysis which projects a high by our entry order. Our objective will be placed at 1.2980 with a stop-loss at 1.3280. If the trade triggers, stops should be trailed to cost (break-even) on a break back below 1.3130. If trade triggers and 1.3130 not broken, position to be closed out at NY close (5pm EST) on Wednesday. Recommendation to be removed if not triggered by NY close on Wednesday.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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