The US dollar index was boosted yesterday as the FOMC quashed any speculation of a rate cut, downplaying inflation fears. There is a rebound of sorts this morning though.
Dollar pairs are in recovery mode after selling off yesterday. The AUD/USD dropped back towards support at 0.7000.
The EUR/USD was volatile, closing well below the day’s highs, but only slightly below the days open and holding the 1.1200 support level. The EUR/CHF is also holding support at 1.14 after reversing heavily yesterday.
The EUR/GBP reversed below the 0.8600 level yesterday as the pound out-performed the euro. The GBP/USD itself held up relatively well, posting gains while other dollar pairs reversed and is unchanged this morning.
The USD/CAD saw some of the biggest gains yesterday, reversing most of Tuesday’s losses, with small buying this morning.
The USD/CHF remains rangebound, dropping below 1.0150 yesterday, but ultimately closing only slightly below 1.0200.
Yen pairs are on the rise, with the USD/JPY rallying for the second straight day. Other yen pairs are also posting slight gains, with the GBP/JPY rallying for the third straight day.
At 11.00, we have the UK BOE inflation report, MPC official bank rate votes, official bank rate and policy summary. BOE governor Carney speaks at 11.30.
With the threat of a US rate cutting seeming to be put on the back burner, now could be a good time to bet against dollar pairs. This is especially the case for the AUD/USD which is struggling in the face of a weakening China.