Awaiting FOMC

The US Dollar remained pinned against two month lows amidst the backdrop of a quiet session that was dominated by the US President Obama’s state of the union address. While the Presidents speech offered no real surprises, it did propose a five year spending freeze on discretionary spending that could cut almost $400 billion from ballooning deficits. The result was a drop in US treasury yields which added to the malaise of the greenback which was still reeling from yesterday’s poor housing price data. The EUR/USD played a forty pip range for the day, threatening earlier New York highs near 1.3700 but never having the steam to break the level. AUD/USD saw a move from 0.9945 to 0.9990 on the day, earlier the pair saw 20 pips over parity for the first time in over a week.

The peaceful price action could also be attributed to the upcoming FOMC statement due later in the day. While the FOMC looks to keep rates unchanged at <0.25% and continue it’s QEII purchase program, the EU has been rather hawkish under President Trichet, who has been talking about fighting inflation and rate hikes. Although a stark contrast exists between the two central banks, the fact that Trichet seems to be ignoring the sovereign debt problem in the EU is something that can not be overlooked. Today the spotlight was back on Portugal as the nation’s Prime Minister snubbed his critics by stating that his nation did not need any help although the almost 7% being paid on Portuguese government bonds seems unsustainable. As well, many economists have singled out the nation as the heir apparent to a bailout following the likes of Greece and Ireland.

Elsewhere, the GBP/USD remained beaten down near 1.58000 after yesterday’s GDP came in at -0.5% versus the forecast of +0.5%. While the USD/JPY looked to be supported by 82.00, it could quite possibly only be so from the fear of Japanese intervention in the pair. Cross yen pairs remained in consolidation mode. XAU/USD remained at the top of the days range near $1335.00.

As mentioned tomorrow’s FOMC meeting and subsequent commentary will be the dominant force in the markets for the day. Tomorrow the Asian day begins with the RBNZ announcing their overnight rate first thing in the morning.

Источник: FOREX.com

26.01.2011