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Daily Report

Dec 14th, 2017: Dollar Dumped on Fed Dissent

Morning Report: 07.00 London

This morning, the dollar index remains under pressure after yesterday’s FOMC meeting. As expected, the Fed elected to increase rates to 1.5%, but crucially there were two dissenting votes. This in addition to a softening in some of the commentary and core CPI missing expectations.

The dollar pairs are mostly enjoying the reprieve, but there are some mixed signals out there. The AUD/USD is the top performer, extending beyond yesterday’s heavy rally. By contrast, the NZD/USD giving back some of yesterday’s gains. Australian employment change came in above estimates.

The pound, euro balance is tilting in favour of the former this morning as the GBP/USD follows on from yesterday’s gains. The EUR/USD is giving something back by contrast.

The USD/JPY is declining again as money flows from the dollar into the yen. Other yen pairs are following the dollar pair trends, with the AUD/JPY extending its rally and the EUR/JPY reversing.

Gold has reversed its previous negative trend with a strong rally yesterday and today.

Coming up today

At 08.00, we have French flash manufacturing PMI at 08.00.

Then at 08.30, we get the SNB monetary policy assessment and Libor rate. The press conference follows at 09.00.

Also at 08.30, we have German flash manufacturing PMI and services PMI.

European flash manufacturing PMI follows at 09.00, alongside services PMI.

At 09.30, we get UK retail sales.

MPC official bank rate vote patterns are released at 12.00, alongside the monetary policy summary and official bank rate.

We switch the ECB at 12.45, for the minimum bid rate and press conference at 13.30.

Also at 13.30, we have US retail sales, import prices and the unemployment claims.

BOC governor Poloz speaks at 17.25.

Trade Idea

The euro has generally performed well against the Australian dollar throughout 2017, but the 1.5600 has acted as resistance previously.

This coupled with the euro’s recent weakness and the Australian dollar’s revival could point to further downside from here.

Dec 14th, 2017: Dollar Dumped on Fed Dissent

A good way to play this is a LOWER trade predicting that the EUR/AUD will close below 1.5400 in 21 days for a potential return of 111%.

Dec 14th, 2017: Dollar Dumped on Fed Dissent