Intraday Market Thoughts

Sentiment Improves Ahead of FOMC

by Ashraf Laidi
Apr 24, 2012 23:59

Sentiment improved in US trading ahead of Wednesday FOMC meeting. On the day, AUD lagged on the low CPI print while fellow commodity currency CAD led. Australian markets will be quiet in the upcoming session due to ANZAC day and Japanese small business confidence is the lone indicator of note. Monday's shorts in AUDUSD & USDCAD hit all targets, while the rest of the trades in EURUSD, EURJPY, Gold and US crude oil remain in progress. Ashraf will give a LIVE WEBINAR during Wednesday’s FOMC statement, walking you through the market reaction to this key event at 17:00-18:00 BST (London Time).

The US session was packed full of economic data and it continued to paint a soft, but steady, picture. Consumer confidence was fractionally lower than expected at 69.2 compared to the 69.9 expected. The current conditions index hit the highest since before the Lehman Brothers collapse but future expectations declined.

The April Richmond Fed climbed to 14 from 7. New homes sold at a 328K pace compared to 319K expected. In Canada, retail sales ex-autos rose 0.5% in Feb compared to +0.6% expected.

EUR/USD fell slightly below 1.3150 in early trading but rebounded to a session high of 1.3218 as persistent repatriation flows late in European trading continue to underpin the common currency. Cable came within two pips of the October high of 1.6165 but was unable to break through.

The overwhelming trade was to wait and watch what the FOMC will do tomorrow. No changes in policy are expected but the market is eager to understand what will take place when Operation Twist expires at the end of June. The Fed must also react to recent softness in jobs data and may even define QE3 expectations.

The Asia-Pacific is likely to remain subdued ahead of the FOMC decision with only April Japanese small business confidence at 0500 GMT. The prior reading was 48.7.

The direct link to Monday’s Premium Intermarket Trades and the charts on Dax vs EURUSD vs German PMIs is here Non subscribers can click ere:



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