A quiet session on the forex front could turn noisy very soon with the latest FOMC statement ahead. Will it get noisy enough to break USD/JPY out of its consolidation?
Before moving on, ICYMI, today’s Daily London Session Watch list looked at an opportunity forming on GBP/CHF after U.K. election polls dragged it lower, so be sure to check that out to see if there is still a potential play!
|Equity Markets||Bond Yields||Commodities & Crypto|
|DAX: 13014.29 -0.70%
FTSE: 7197.27 -0.51%
S&P 500: 3136.23 +0.01%
DJIA: 27910.31 0.00%
|US 10-yr 1.845% +0.014
Bund 10-YR -0.294% +0.008
UK 10-YR: 0.80% +0.036
JPN 10-YR: -0.023% -0.007
|Oil: 59.13 +0.19%
Gold: 1469.00 +0.28%
Bitcoin: 7290.21 -0.54%
Etherium: 145.95 -0.99%
Fresh Market Headlines & Economic Data:
- US consumer prices increase more than expected in November
- Canadian industries operated at 81.7% of their production capacity in the third quarter, down from 83.3% in the previous quarter.
- UK PM Johnson’s lead over Labour narrows to 12 points: Opinium
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- FOMC Monetary policy statement at 7:00 pm GMT
- U.S. Monthly budget statement at 7:00 pm GMT
- FOMC Press conference at 7:30 pm GMT
- New Zealand Visitor arrivals & Food inflation at 9:45 pm GMT
- Japan Machinery orders & Foreign investment at 11:50 pm GMT
- Australia Consumer inflation expectations & RBA Bulletin at 12:30 am GMT (Dec. 12)
- Bank of Japan’s Amamiya speech at 1:30 am GMT (Dec. 12)
- Swiss Economic forecasts at 6:45 am GMT (Dec. 12)
What to Watch: USD/JPY
The upcoming FOMC statement is a highly anticipated event that has had most many forex traders sitting on the sidelines, behavior we can see in many currency pairs, including USD/JPY above. On the one hour chart, the market has stayed within a 30 pip range this week, and has basically tightly around the 108.70 handle for the last two weeks. This has formed somewhat of a symmetrical triangle, that may be poised for a breakout on today’s event.
Now while there aren’t any expectations of the FOMC making any policy changes, any surprise shift in the policy or economic outlook will likely spark financial market volatility, including the U.S. dollar. So basically, what we’re looking for today is anything different from the current Fed stance that “policy is appropriate” and they will sit back to see how everything will play out. If so, it’s likely volatility will pop, and that triangle could easily break.
Keep in mind though that the initial pop may be short-lived as the press conference will come thirty minutes later, which is when the market will likely make their directional bias after hearing from Fed Chair Jay Powell.
So, it’s likely the best strategy for today’s event is to wait for the press conference to see what the Fed Chair says and the market’s reaction to it. At the point, we should be able to see a clear break of USD/JPY consolidation and possibly even some momentum. For the bulls, targeting the 109.10 – 109.50 area is within the daily ATR and makes for a solid short-term potential R:R. And for the bears, short-term support could form around the 108.00 – 108.30 area, unless we get a very dovish statement from the Fed.