Forex Today: What if the Fed…?

The Greenback managed to recoup part of the ground lost in recent days on the back of firmer results from US data releases, which helped quash somewhat concerns over a significant slowdown of the US economy, all prior to the Fed’s interest rate decision on Wednesday.

Here is what you need to know on Wednesday, September 18:

The US Dollar Index (DXY) reversed three consecutive daily pullbacks helped by a decent bounce in US yields while investors continued to price in a 50-bps rate cut by the Fed on Wednesday. The salient event of the week will be the FOMC meeting on September 18, seconded by the weekly Mortgage Applications by MBA, Building Permits, Housing Starts, and Net TIC Flows.

Renewed buying pressure in the Greenback kept EUR/USD’s price action subdued in the low-1.1100s ahead of the FOMC gathering. On September 18, the final Inflation Rate and Construction Output in the euro zone are due, along with speeches by the ECB’s Buch and McCaul.

GBP/USD traded on the defensive and retreated from earlier peaks near 1.3230 in response to the data-led bounce in the US Dollar. The UK Inflation Rate will be published on September 18.

USD/JPY rose to three-day highs and revisited the 142.00 neighbourhood on the back of fresh gains in the Greenback and higher US yields across the board. The Balance of Trade results and Machinery Orders will be unveiled on September 18.

AUD/USD alternated gains with losses around 0.6750, reaching new multi-day highs despite the better tone in the US Dollar. The Westpac Leading Index is expected on September 18 followed by the speech by the RBA’s Jones.

Prices of WTI came under pressure near the $70.00 mark per barrel as Chinese demand concerns returned to the fore.

Gold prices saw their recent strong advance trimmed on the back of the firmer US Dollar and the recovery in US yields. Silver prices extended Monday’s inconclusive price action, trading in a narrow range below the $31.00 mark per ounce.