Article / 01 February 2018 at 15:37 GMT

FX Board: USD post-FOMC bounce so far a dead cat – #SaxoStrats

Head of FX Strategy / Saxo Bank
Denmark
  • FOMC saw a modest trimming of USD shorts
  • But dollar gains subsequently faded ahead of Friday's NFP
  • Risk-aversion capped action in some JPY crosses today

By John J Hardy

Please see today's FX Board PDF attached to this post for the latest Notes of Interest, Trend and Trend Heat readings, as well as a few thoughts on key chart developments below.

Charts:

GBPJPY
The JPY was weaker overnight again as the most recent signals from the Bank of Japan are that they will stick to their guns on controlling bond yields even as yields rise elsewhere. But it is hard for the yen to continue lower when risk aversion rears its ugly head as it did at times today yet again, so we saw an interesting cap of the action in some of the JPY crosses today, including GBPJPY shown below. It's too early to tell if the new top has been rejected, but we'll look for signs of broadening JPY firmness if global risk finally suffers a chunky correction. Note the unconfirmed momentum divergence on our (fast) MACD indicator as well.
gbpjpy
Source: Saxo Bank 

AUDUSD
The Aussie has been hit by negative news, including fresh limitations and stricter policy on inbound investments clearly aimed at China and overnight saw a weak building approvals number for December. Still, the US dollar has been so weak that the bad news has only seen a brief interaction with the 0.8000 level in AUDUSD. Mere consolidation moves could target the 21-day moving average, which is rising fast, and then the first Fibo retracement of the large rally move just below 0.7900. The 61.8% Fibo around 0.7750 is the bigger downside swing level. 
audusd















Source: Saxo Bank 


– Edited by Clare MacCarthy

 

John J Hardy is head of FX strategy at Saxo Bank 
Download document

FX Board for Thursday, February 1, 2018

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