21 Mar: US$, yields firm. Stocks steady ahead of today’s FOMC Meeting.

By | March 21, 2018

 

The US$ is generally firmer today with the Euro and Sterling notably under pressure as economic respective data outcomes missed expectation. In the UK, the CPI miss was by 0.1%, coming in at 0.4%mm (exp 0.5%) and at 2.7%yy (exp 2.8%).  The Euro had its own issues when the miss in the German and the EU ZEW figures came in considerably below expectations. The German ZEW economic sentiment dropped to 5.1 in March, down from 17.8, below expectation of 13.0 while the current situation gauge dropped to 90.7, down from 92.3, but above expectation of 90.0. The EU ZEW economic sentiment also dropped sharply to 13.4, down from 29.3, missing expectation of 28.1. Elsewhere, the US$ remained firm against the commodity bloc and is also higher against the Yen today. Stock markets have stabilised ahead of the FOMC, due at the end of today’s session while the metals are rangebound but heavy at the end of the session. WTI gained 2% as the prospect of supply disruptions amid Middle East tensions offset expectations for a rise in U.S. crude supplies for the fourth-straight week.

Wednesday will begin with a quiet Asian (NZ NZ Visitor Arrivals, Credit Card Spending; Australian WBC Leading Index) and EU 19 March (UK Unemployment), but will then become busy when the US get going, with all the focus on the 1st Jerome Powell led FOMC Meeting. A rate hike is fully priced in but the real interest is going to lie in the dot-plot and Powell’s outlook. His optimism over the US economy has encouraged speculation that the Fed could hike rates four times this year, up from the current dot-plot outline for 3 hikes. Traders will therefore be scrutinising his words to see if he will maintain his hawkish stance. If so expect the US$ to resume its recent rally, or vice versa if he stands pat and takes a more cautious stance.

CURRENCIES
EURUSD: 1.2240
Res  1.2280  1.2300  1.2330
Sup  1.2220  1.2200  1.2170
USDJPY: 106.53
Res  106.60  106.75  107.00
Sup  106.35  106.20  106.00
GBPUSD: 1.3997
Res  1.4020  1.4040  1.4065
Sup  1.3980  1.3950  1.3930
USDCHF: 0.9565
Res  0.9570  0.9585  0.9615
Sup  0.9540  0.9505  0.9485
AUDUSD: 0.7681
Res  0.7700  0.7720  0.7735
Sup  0.7670  0.7645  0.7610
NZDUSD: 0.7184
Res  0.7200  0.7220  0.7245
Sup  0.7175  0.7140  0.7100
INDICES / COMMODITIES
S&P: 2723
Res  2745  2770  2800
Sup  2700  2680  2660
DJI: 24772
Res  24800  24925  25050
Sup  24680  24605  24465
ASX SPI: 5937
Res  5950  5965  5980
Sup  5925  5905  5890
XAUUSD: 1311
Res  1315  1320  1325
Sup  1305  1300  1295
XAGUSD: 16.19
Res  16.35  16.45  16.55
Sup  16.10  16.00  15.90
WTI: 63.72
Res  64.25  65.00  65.80
Sup  63.25  62.55  61.45