Non-Event Risk

  • Fed keeps the market guessing
  • Dovish RBNZ props AUDNZD long
  • Beaten up Pound looking for help

BORING - We just had a Fed decision and the market isn't moving? What's going on? Well, the Fed didn't really give us much to chew on. Remember, there was no Yellen press conference and no updated economic projections. Just a monetary policy statement that didn't really deviate much from previous. While the Fed did acknowledge the deterioration in global markets, there was nothing in the statement ruling out the possibility for a March hike. And so, we got the reaction that we got. The RBNZ was far more volatile than then Fed with Kiwi selling off sharply after the New Zealand central bank signaled more rate cuts ahead. This was a very good development for my portfolio, with AUDNZD racing higher through 1.0900 as a result. I continue to hold my long AUDNZD exposure from 1.0660 and will be looking for the formation of an inverse head and shoulders bottom on the monthly chart.

UK GDP CATALYST - Moving on, with the Fed risk now behind us, this leaves me focused on economic data. Looking at today's calendar, it's the UK GDP release that stands out most for me. The Pound has been pounded in recent trade, and the currency is begging for additional corrective relief. Certainly there is room for a healthier GBPUSD correction back towards the 1.4800 area. And so, today's UK GDP release will be a big one to watch, with anything on the better side of expectation to inspire a more meaningful bout of profit taking on Sterling shorts. At the same time, if the data disappoints and opens another drop back towards the 1.4080 low, I will still happily look to be a buyer into an overextended intraday move. While the GDP data will add to UK worry, it is also data that will be quickly forgotten if US data later in the day disappoints and if UK data in the sessions ahead improves. The point is that the market is already extended and wants to have an excuse to rally. And so, I will be looking to buy this stretched currency pair. I already did well catching a 200 point move last week and will look to jump back in again today.......if it's there.

Market is looking for an excuse to buy #GBP. Via @joelkruger

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