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Early Greenback Weakness Reverses, Narrow Pre-FOMC Ranges

FOREX
  • Initial greenback weakness on Tuesday saw the USD index fall around 0.25% ahead of NY trade. However, firmer-than expected August Building Permits data in the US sparked a reversal back to unchanged levels, keeping G10 ranges very contained ahead of Wednesday’s FOMC decision and press conference.
  • The strong details of the Canadian August CPI report means that CAD is near the top of the G10 FX leaderboard, with USDCAD having briefly breached support below 1.3394 to trade as low as 1.3381. The pair has had a solid bounce along with the broad greenback reversal, however, USDCAD does remain 0.3% lower on the session. In similar vein, the Norwegian Krone is the best performing currency after yesterday’s struggles and ahead of Thursday’s Norges Bank rate decision. The overall crude oil complex continues to be supported by indications of tightening supply and more optimistic views of demand.
  • Ahead of the Fed decision tomorrow, it is worth noting that USDJPY has been edging higher as we approach the APAC crossover, to trade within 5 pips of last week’s high at 147.95. Higher US yields have been unable to spark any topside momentum, however, trend conditions remain firmly in bullish territory, with sights on 148.40 next, the Nov 4 2022 high.
  • UK CPI headlines the docket on Wednesday morning ahead of the Bank of England decision on Thursday. Despite a very muted session for GBPUSD, the trend needle continues to point south and the pair is trading near recent lows. The focus is on 1.2369, the Jun 5 low, and 1.2308, the May 25 low and a key support.
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