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On Wednesday, the Euro closed up. A weakening of the dollar came after the publication of the FOMC’s minutes. They show that almost all FOMC members are in agreement over a plan to gradually reduce the central bank’s balance sheet over the course of the year. They also came to the consensus that they need to hold off on raising interest rates in order to determine whether or not the current economic slowdown is temporary. The dollar reacted to this with a drop. US 10Y bond yields have fallen to 2.255%. The Euro/dollar rate rose to 1.1220 and this growth continued in Asia to 1.1245.
The minutes haven’t changed the market view on interest rates. According to CME Group’s FedWatch, the probability of a rate hike in June is 83.1%, 84.4% in July and 88.6% in September.
Market expectations:
Today (Thursday), trader attention will be focused on the OPEC meeting, in which the decision may be taken to extend the length of the agreement reached on 30/11/16 for reducing oil production. This will have an effect on the price of oil as well as commodity currencies, with the latter affecting the majors.
I imagined several different scenarios today, but in the end, I haven’t gone with any of them. The situation is 50/50. The price could renew the maximum of 1.1268 as well as return to the support at 1.1175.
Day’s news (GMT+3):
- 11:00 Australia: RBA assistant governor Debelle’s speech;
- 11:30 UK: GDP (Q1), total business investment (Q1), BBA mortgage approvals (Apr), index of services (Mar);
- 15:30 Canada: corporate profits (Q1). USA: initial jobless claims (19 May), wholesale inventories (Apr);
- 17:00 USA: FOMC member Brainard’s speech;
- 17:30 USA: EIA natural gas storage change (19 May);
- 19:00 Canada: Bank of Canada deputy governor Leduc’s speech;
- 20:00 Eurozone: ECB member Constâncio’s speech;
- All day: OPEC meeting.
EURUSD rate on the hourly. Source: TradingView
Intraday forecast: low: n/a, high: n/a, close: n/a.
