Forex headlines for January 27, 2016:
Fed:
- Federal Reserve holds rates unchanged: Statement highlights
- Full text of the FOMC decision on January 27, 2016
- Five dovish hints in the Federal Reserve statement
- Watch corporate spreads on the Fed - Morgan Stanley
RBNZ:
- RBNZ announce NO CHANGE in cash rate
- Full text of the RBNZ statement Jan 28, 2016
- RBNZ January statement compared with December - spot the difference
- Fonterra cuts milk price forecast ahead of RBNZ
Everything else:
- December 2015 French jobless rises 15.8k vs 0.0k exp
- US EIA crude oil inventories +8383k vs +4000k exp
- Five brokers let off the hook over LIBOR rigging - Bloomberg
- US Dec new home sales 544K vs 500K expected
- US MBA mortgage applications w/e 22 Jan +8.8% vs +9.0% prev
- Iraq willing to attend OPEC meetings being sought by Venezuela
- US 10-year yields up 0.05 bps to 1.999%
- Gold up $5 to $1125
- WTI crude up 65-cents to $32.10
- AUD leads, NZD lags
The FOMC was the focus of the day and that helped to keep markets generally in check in the hours leading up to the decision. After it was released the moves were initially choppy. EUR/USD hit a US low and stocks climbed but that reversed later and risk trades suffered. The euro rose above 1.0900 but struggled above the earlier high. It eventually cleared it by a couple pips but then finished back below the big figure.
Cable moved independently of the Fed as sellers stepped in early in US trading and sold it down to 1.4250 after an initial rally to 1.4350. It's currently fighting the session low, which came at the London fix.
USD/JPY climbed despite broader USD selling in the early going. It near 119.00 early and was about 15 pips lower ahead of the Fed. It chopped on the decision but didn't resolve down until stocks did.
A bigger theme on the day was the disconnect between the risk trade and oil. Crude finished up 2.3% but USD/CAD was down just 24 pips. It was also the first time since October than stocks fell more than 1% on a day when oil gained more than 1%. That divergence won't last.
NZD was hit but the Fonterra forecast downgrade and weak risk sentiment at the same time as the RBNZ decision. It added up to a roughly 70 pip fall after the announcement and 100 pip decline from the session high.
One asset I continually draw attention to is gold. It finished higher again and has rallied in several different risk environments over the past week. That bodes well as it continues to carve out fresh 3 month highs.
