Currency markets consolidate ahead of Federal Reserve meeting
Ahead of next week Federal Reserve Meeting, the currency markets started to consolidate. Most market participants continued to believe that the Fed will taper its bond purchase program as reflected in a Bloomberg poll which showed more than 66% believe tapering will take place. This feeling amongst analysts comes despite last week’s weaker than expected non-farm payroll data which showed weaker than expected job gains.
Next week on beginning on September 17, the Fed will meet for two days to determine if it is necessary to reduce its current 85 billion a month bond purchase program. Many believe that the Fed will taper a small amount just to get the program of raining in liquidity started.
In Europe on Friday the economic news was sluggish. The European Union’s official statistics agency reported that employment fell to 0.1% from the first quarter to stand at 145 million, which is 1% lower than it was in the second quarter of 2012.
In Japan the government upgraded its assessment of the economy for the first time in two months, citing improvement in capital expenditures but at the same time consumption was flat. This comes on the heels of a weaker than expected machinery orders report released this week which showed a flat reading as opposed to the 2.5% increase which was expected.
Sterling was the best performing currency throughout the week, breaking out above resistance near the June highs at 1.5752. Support is seen near the 10-day moving average near 1.5680. Momentum on the GBPUSD currency pair is strong as the MACD (moving average convergence divergence) index generated a buy signal where the spread (the 12-day moving average minus the 26-day moving average) crossed above the 9-day moving average of the spread. A warning signal is that the RSI (relative strength index) is printing near 70, which is above the trigger for an overbought condition.
Sorry. No data so far.