- Federal Reserve Chairman Jerome Powell is ‘considering’ holding a press conference after every policy meeting.
- EUR/USD dumps on market’s first take on the headlines, buy the dip?
- All eyes on the FOMC and ECB from here.
EUR/USD has been sold off as the dollar takes off on the back of noise that Federal Reserve Chairman Jerome Powell is ‘considering’ holding a press conference after every policy meeting rather than every other meeting.
We are 24r hours away from Wednesday’s FOMC showdown, so he will likely decide after tomorrow’s meeting as to whether it would be worth his while doing so, once he has gathered up the sentiment from his colleagues, in a meeting that started today.
The Wall Street Journal noted that Atlanta Fed President Raphael Bostic said in an interview earlier this year,”We’ve evolved to a place where the market only thinks we’ll move if there’s a press conference… This is “a sign that what we’re doing right now isn’t working,”
“To fix the problem, the Fed could raise interest rates at a meeting without a press conference, said Mr. Bostic. Or it could send Mr. Powell out to face reporters after every meeting,
– WJS
“It’s important that the market believes that we could potentially move at any meeting that we have,”
-Bostic said.
EUR/USD dropped from 1.1772 to as low as 1.1736 on the noise, a move that could well be cleaned up by the committed bulls given that there could have been some misunderstandings that it was a new written rule. The point is, the Fed is on the move and that is underpinning the greenback while there are still many uncertainties to the direction of their counterpart’s monetary policy in major global central banks.
Meanwhile, from data overnight, ongoing trade concerns alongside the recent Italian election have served to unsettle investors, if Germany’s ZEW survey is anything to go by, signalling a further slide in investor confidence. The index fell to a weaker than expected -16.1 (versus -8.2 in May).
From the US calendar, the May CPI report came bang-in line with expectations, underpinning the case for a rate hike tomorrow and leaving the door open, for at least, one additional hike in 2018. Both headline and core at 0.2% m/m, raising the headline annual inflation rate to 2.8% y/y and core to 2.2% y/y. “We expect this report to keep the Fed on track with a gradual pace of rate hikes,” analysts at TD Securities explained.
ECB snapshot preview (Thurs):
“This week’s ECB policy meeting has been billed as “pivotal” for deciding on when to end asset purchases and we anticipate a positive EUR response to signalling that purchases will wind up late this year after a short taper,” analysts at Scotiabank argued.
EUR/USD levels
The recovery back above the 21-D SMA set the pair up for a neutral start this week as traders got set for key events. The broader range remains between 1.1500 and 1.1850. A break of 1.1855 opens 1.20/1.21. Below recent lows of 1.1509, the 200-week moving average is located at 1.1435 and the next significant supports could be at 1.1186/1.0814 (as being the 61.8% and 78.6% retracements). Near-term, the 10-D SMA is located at 1.1726, just below the 21-D SMA at 1.1733 offering a solid support area as being the ascending support line from end of May business and lows at 1.1594.
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