Riskier assets firmed in the European session as investors eye the FOMC meeting. The US dollar struggled for traction as traders await the Fed decision which is likely to be less hawkish. Inflation in the UK soared beyond expectations and remained in double digits. Inflation in South Africa remained elevated in February.
EURUSD extended gains by +0.22% from an early day range as the dollar struggled ahead of the FOMC meeting. The euro benefited from a subdued buck as economists maintained a dovish fed outlook. Upside traction in the pair, however, remained undefined as traders were cautious ahead of ECB President’s speech and Fed meeting. There is no high-impact data from the Eurozone economic calendar to move the currency apart from a speech from Ms Lagarde. A breach of the 1.0800 resistance may set targets at 1.0850. However, a slide may give sellers 1.0700 and 1.0680.
GBPCHF soared +0.54% as the sterling strengthened in the aftermath of UK inflation data. Headline inflation in the UK remained in double digits and was higher than the previous reading ahead of the BoE’s rate decision this week. Inflation is said to be pushed higher by higher food prices in the country. Consumer Price Index [YoY] rose to 10.4% from an estimate of 9.9% while CPI month-on-month rose to 1.1% beating an estimate of 0.6%. The pair surged above the 1.1300 psychological mark after establishing a low at 1.1250 as 1.1400 may be a challenge to the upside.
CADZAR dipped -0.32% after inflation in South Africa surpassed expectations. Core Consumer Price Index [MoM] rose 0.8% vs a survey of 0.6% while the CPI year-on-year data rose to 7.0% from 6.9%. The Canadian dollar remained under selling pressure after downbeat CPI data from the country along with subdued crude oil prices on the day. The pair fell from the 13.55 intraday high as the slump may target 13.45/13.40 in the short term.
European stocks were mixed in European trade as the BoE rate decision and Fed meeting loomed. The UK100 was down -0.23% below the 7550 level as bears may reclaim the 7450 mark. France40 was flat at -0.07% ranging between 7080 and 7150. A move higher may give up 7200. German40 rose +0.17% after breaching the 15200 level. Next up on the rally is 15500.
US stock futures maintained a cautious trade as the Fed decision nears. The S&P 500 futures were flat at +0.01% around the 4000 regions as 4050 may be retested in the near term. The DJIA futures struggled for strong traction above the 32500 level trading at +0.07%. Nasdaq100 futures lost -0.12% capped by 12750 on the upside.
In commodities, gold prices remained pinned down as fed worries overtook bank jitters. XAUUSD was trading at +0.03% in a range between 1947 and 1935. Further down bears may reclaim 1920 and 1900.