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The markets were edgy as investors remain cautious ahead of the Fed policy meeting. The dollar edged lower against major assets in the European session underpinned by a drop in CB Consumer Confidence on Tuesday. Commodities were slightly higher as Russian trimmed the supply of oil supply into Europe.
USDCAD suffered selling pressure dropping by -0.23% as investors eye the FOMC meeting minutes. The possibility of a Fed rate hike by 75bps seems dampened by the negative CB Consumer confidence that dropped from 97.2 to 95.7 in July on Tuesday. The pair plunged to a 6-week low at 1.2850 and a break below that level could trigger selling pressure towards the 1.2700 level. Upside gains are capped by the 1.2900 psychological resistance.
EURAUD rose by +0.33% as Australia’s inflation miss pushes traders to back off a supersized RBA rate hike. The AUD CPI second quarter data dropped to 1.8% from a previous reading of 2.1% while the CPI YoY missed expectations to 6.1% vs 6.2% surveyed. Bulls are currently trading above the 1.4555 level, a 20 April 2022 low and bulls are capped by the 1.4720.
However, a break below that near-term support could cause selling pressure and bears may target the 1.4325 low, a 5-year low. Traders shift their focus to the Australian Retail Sales (MoM) for June due for release early Thursday morning.
GBPNZD rallied by +0.32% in the early European session, extending gains for the 3rd day straight. The New Zealand Dollar was generally weaker ahead of ANZ Business Confidence data due for release early Thursday morning. The pair bounced off a 1.91500 support and bulls need to challenge the 1.9400 near-term resistance for the price to rally further to the 1.9600 level.
European stocks were boosted by the earnings season. FTSE100 rallied by +0.35% as bulls continue to hold above the 7300 level and a break above the 7350 level could increase the target to the 7400 psychological level.
DAX index was up +0.22% despite struggling to hold gains above 13000 psychological support. Upside gains are capped by the 13200 and a failure to break above that level could cause selling pressure towards the 12850 level, a 7-day low. CAC40 soared by +0.64% despite gains challenged by the 6250 level. Critical support is at 6120 and bull targets are at 6400 level if 6250 is breached.
US stock futures rallied as yields slid ahead of the FOMC meeting. S&P 500 rallied by +0.64% after bouncing off the 3915 a 6-day low and gains are capped by the 4000 psychological level. A failure to hold gains above the 3900 could change the trend to a bearish outlook in the near term. Critical levels are at 3800 and 3750 levels.
Nasdaq100 futures were up by +0.94% from 12050 after a 3-day plunge. Tech giants GOOGLE and Microsoft earnings reports that were released on Tuesday spurred hope in investors for a better Q3.
DJIA index edged higher by +0.40% and bulls remain capped by the 32000 psychological barrier. A break below the 31500 immediate support could cause a further slide towards the 31000 support.
The benchmark US10-year bond yield trimmed gains by -0.64% after bouncing off a 2.708% 3-months support on Tuesday. A rally above the 2.900% could change outlook to bullish and on the contrary, a breach below the near-term support could cause selling pressure towards the 2.50% level. Investors shift their focus to the FOMC meeting minutes.
