The Greenback was under pressure during early trading on Wednesday as bears exploited the pre-FOMC jitters and anxiety to attack prices lower.
Although sellers may be commended on their ability to trigger a sharp technical correction ahead of the FOMC meeting, the downside risks may be limited especially after Tuesday’s impressive inflation data reinforced expectations of a probable rate hike in March. Much attention will be directed towards both the FOMC statement and economic projections this evening which may offer investors some insight on the pace of hikes this year.
An upwards shift in the updated “dot plot” could heighten speculations of the Federal Reserve raising US interest rates at least four times in 2017. The Dollar should remain buoyed with confidence consistently rising over the health of the US economy and prospects growing over higher US interest rates this year.
From a technical standpoint, although the Dollar Index is slightly pressured on the daily charts, a decisive breakout above 101.50 could open a path back towards 102.00.
Sterling could turn chaotic
Investors should be prepared for a chaotic rollercoaster ride when dealing with Sterling as the Brexit developments, political risk and overall uncertainty sparks explosive levels of volatility. It was only on Monday investors were speculating that Article 50 will be triggered as soon as Tuesday before markets confirmed that Theresa May will start the Brexit negotiations at the end of the month. Recent reports released during early trading on Wednesday suggesting that the European Union could force the UK to wait until June to start the Brexit talks has compounded to the confusion which may translate to more pain for Sterling in the longer term. With the ongoing Brexit woes effectively strengthening the relationship between uncertainty and Sterling, further downside losses should be expected.
Concerns remain elevated over Brexit having negative impacts to the UK economy with the recent mixed jobs reports providing permission for bears to send the GBPUSD lower. Although the unemployment rate in the UK has declined to its lowest since 1975; the decline in average earnings that may rekindle
No comments:
Post a Comment