- US Dollar Index rises toward 96 on strong ADP data.
- Wall Street starts the day on a strong footing.
- FOMC is expected to keep its policy rate unchanged at 2.5%.
The USD/CHF pair, which closed the previous day 30 pips higher, continued to push higher and rose toward the critical parity mark. However, with markets moving to the sidelines ahead of the FOMC announcements later in the session, the pair started to consolidate its daily gains and was last up 0.4% on the day at 0.9983.
Earlier in the session, the ADP announced that the employment in the private sector increased by 213K from December to January to beat the market estimate of 178K and provided a boost to the greenback. The US Dollar Index, which suffered heavy losses earlier this week, advanced toward the 96 handle to allow the pair to extend its daily rally. At the moment, the index is up 0.1% on the day at 95.90.
Meanwhile, Wall Street’s impressive upsurge today made it difficult for safe-havens to find demand and caused the CHF to weaken against its peers.
At 19 GMT, the FOMC is expected to announce that it’s keeping the policy rate steady at 2.5%. 30 minutes later, Chairman Powell will be delivering his remarks on the policy outlook in a press conference and markets will be looking for fresh clues on the timing of ending the balance sheet reduction scheme. Previewing the event, “We expect Chair Powell to sound cautious over the outlook at the press conference given the global slowdown, and domestic risks such as potentially further government shutdowns, and tightening financial conditions,” ABN AMRO analysts said.
FOMC Preview: What 8 major banks are expecting from January meeting?
Key technical levels
With a daily close above 1.0000/0.9995 (psychological level/daily high), the pair could target 1.0050 (Nov. 7, 2018, high) on the upside ahead of 1.0130 (Nov. 13, 2018, high). Supports, on the other hand, could be seen at 0.9945 (daily low), 0.9900 (psychological level/50-DMA/20-DMA) and 0.9870 (Jan. 16 low).
Share
