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Forex Market UpdateUSD stronger after FOMC statement!
The Fed hiked rates 25bps as expected, although it was the suggestion that further hikes would depend on the economic outlook and thus data going forward which caused dollar strength.
MAJOR HEADLINES â€“ PREVIOUS SESSION
â€¢ US MBA mortgage applications May 5, out at -5.8% vs. a prior reading of 8.8%.
â€¢ Canadian new housing price index (MoM) March, out at 1.0% vs. 0.6% expected.
â€¢ US Monthly budget statement April, out at $118.9B vs. $116.5B expected.
â€¢ FOMC rate decision May 10, out at 5.0% which was line with the expected 25bps hike.
â€¢ Japan's money supply M2+CD (YOY) April, out at 1.7% vs. 1.5% expected.
â€¢ Japan's broad liquidity (YoY) April, out at 2.3% vs. 2.1% expected.
â€¢ Japan's bank lending (YoY) April, out at 1.2% vs. a prior reading of 0.4%.
â€¢ Australian employment change April, out at -3.20 vs. 5.00 expected.
â€¢ Australian unemployment rate April, out at 5.1% which is was in line with expectations.
â€¢ Australian participation rate April, out at 64.3% vs. 64.4% expected.
â€¢ New Zealand's unemployment rate Q1, out at 3.9% vs. 3.7% expected.
THEMES TO WATCH â€“ UPCOMING SESSION
Finally some dollar strength yesterday with EURUSD falling short of testing the key long term retracement level at 1.2890. It seems as if the market was anticipating a more dovish statement with much speculation lately that the Fed could cause as early as June. But it seems necessary to take a closer look at the US data coming up in months to come as this will be the main driver for the rate hike to continue.
The US Treasury semi-annual report on FX practices, showed that it did not designate China a FX manipulator and that China is committed to flexible exchange rates and taking steps towards it. But did comment that "Let us be clear: we are extremely dissatisfied with the slow and disappointing pace of reform of the Chinese exchange rate regime" and entire international community must work together cooperatively to address global imbalances". Both EUR and USD/JPY found some upside relief, with USDJPY rallying more then a 150 points just above 110.00 support.
Note: the support/resistance levels used in the matrixâ€™s of this document are levels derived from yesterday high, low and close. Reference in the text to other support/resistance levels will occur.
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