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The dollar index which measures against six major currencies moved steadily higher as the market maintained a cautious mood ahead of the FOMC meeting minutes. Geopolitical tensions continue to escalate as Wang Yi, a Chinese top diplomat visits Moscow. The Reserve Bank of New Zealand hiked its key rates by 50bps to 4.75%.
GBPUSD trimmed 3-day gains ahead of the highly awaited FOMC meeting minutes. The slide comes after pleasing PMIs from the UK on Tuesday which showed improved business activity. The dollar also got boosted by the positive PMI released on Tuesday along with expectations that the Fed will maintain its hawkish stance. The cable lost -0.32% trading below the 1.2000 mark as 1.2050 remains a key area to watch.
AUDJPY continued to push lower by -0.55% after disappointing Australian data. The Australian Bureau of Statistics showed that wages in Australia dropped in the fourth quarter to 0.8% from an estimate of 1.0% on a quarterly basis. Building and engineering construction activity in Australia declined in the fourth quarter as shown by the Construction Work done [Q4] at -0.4% vs 1.5% surveyed. The Bank of Japan has yet again purchased the 10-year government bonds after the yield breached the central bank’s upper limit of 0.5% once more. The move puts the BoJ’s ultra-loose policy under questioning. Sellers may reclaim 91.50 in the short term.
EURNZD gained +0.20% after opening with a gap higher before trimming gains on the RBNZ rate decision. The central bank delivered the anticipated 50 basis points, raising interest rates from 4.25% to 4.75%. An extended rally may be stalled by downbeat European data which saw the German ifo Business climate dropping to 91.1 vs 91.4 expected along with a drop in Italian CPI. A number below 1.7050 may confirm sellers’ dominance.
European stocks plunged for the second session following mixed Eurozone data. FTSE100 slumped by -1.03% breaking below the 7950 near-term support and bears could target the 7850 level in the near term. CAC40 fell by -0.96% and the next key support level is 7200 level. On the upside, gains are capped by the 7370. DAX plunged by -0.67% as bears flirted with the 15200 support and a break below that level could give bears the 15000 level and 14650, the previous resistance-turned-support.
US stocks futures remained steady as fed meeting minutes are in focus. US500 futures were slightly lower by -0.07% following a break below the 4050 near-term support to the 4000 psychological level. A failure to hold above that level could trigger further selling pressure towards the 3950 level. US100 futures were the biggest loser pre-market open, down -0.16% after breaking below the 12200 support. The next key level is 11850 if bulls fail to hold above the 12000 level. US30 futures remained steady at -0.07% and critical levels to watch are 33500 resistance and 33000 support.
In commodities, Gold maintained a steady outlook ahead of the much-anticipated Fed meeting minutes. The yellow metal was down -0.06% shading off earlier gains and key levels to watch out for are the 1850 resistance and 1800 psychological support level.
