Market News & Insights
11 October 2017

Dollar Looks to Fed Minutes 

It was an interesting day in markets yesterday. The euro rallied higher against most counterparts as German data helped keep sentiment supported while some apparent progress between Spain and those calling for Catalonian independence reduced some of the associated risks for the region. The news flow related to the euro has been quite hawkish in recent days and as such we’ve seen EURUSD rally over 1.5% with the single currency also firmer against JPY, CHF and in the last hour even EURGBP, which had been more or less trading flat all week, looks to test back towards last week’s highs and sellers around the .9000 area. EURUSD also on the way higher this morning and looking to test sellers interest following a break above the first group of sellers around 1.1820 which held the move higher yesterday. There is very little in the way of data from the Eurozone today so we’ll be focused on the technical outlook today.

GBPUSD has enjoyed some outperformance this week, the pound rallying over 1.4% helped in part by a weaker USD, but also by some better than expected manufacturing data from the UK with manufacturing production up 2.8% vs 1.9% expected, while industrial production data was also far firmer. It wasn’t all good news for the pound however as trade balance data was considerably weaker than expected and cause for some concerns going forward. Brexit negotiations continues and to be honest there feels to be growing uncertainty around what way they will progress. We’ve seen a lot more warnings of a hard Brexit and no transition and people are starting to take heed.

Stateside the US took a knock back, we warned yesterday that Trump was having some issues with budget talks as he bangs heads with Senator Corker, thus creating problems for his tax plans. The real key however will come from the FOMC minutes from the September 20th meeting, due for release this evening. The Fed signaled a notable uptick in hawkish rhetoric and should the minutes confirm that then the greenback goo well have space to rally higher. We also have the Feds Evans speaking on Economic and monetary policy earlier in the day which should spur on some USD volatility. GBPUSD sitting at resistance at 1.3220, a break above will open a move higher towards 1.3400. Support ahead of 1.3100 likely to hold moves lower.