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Greenback Consolidates Moderate Weakness Ahead of December FOMC

FOREX
  • Despite some volatile price action over the US inflation data, the USD index sits just 0.20% lower on the session as we approach the APAC crossover. Potential profit-taking evident as resistance at 104.26 failed to give way across the Friday/Monday sessions and as markets await tomorrows FOMC meeting.
  • US headline data surprised very moderately to the upside and appears to have supported early greenback weakness across, however, a more benign unrounded core figure did initially prompt the USD to come under a brief bout of additional weakness. Price action saw USDJPY briefly print a low of 144.74 from an earlier 146.18 high, although the pair has since consolidated around 145.65.
  • G10 currency adjustments remain small on the day, given the fact that the data is unlikely to alter the FOMC’s thinking before tomorrow’s decision and the release of its latest set of projections.
  • Both the Euro and the Swiss Franc are among the best performers amid the softer dollar, with both the ECB and SNB meetings also this week.
  • More broadly, however, EURUSD maintains a softer tone and is trading just above its recent lows. Price has recently pierced support at the 50-day EMA - at 1.0774 and a sustained break of this average would strengthen a bearish theme and open 1.0693, the Nov 14 low. On the upside, initial resistance is at 1.0820, the 20-day EMA.
  • UK GDP and US PPI data will precede tomorrow’s Fed meeting/presser, where the FOMC will hold rates in December for a 3rd consecutive meeting, further cementing expectations that the hiking cycle is over.
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