The anticipation of the FOMC minutes to be released in the afternoon of the New York Session sparked a choppy trade in London. The price action lacked the normal ebb and flow of typical conditions. Instead, the charts reveal that currencies hacked around wide ranges in sporadic moves of impulsive buying and selling. Inconsistent volume came and went throughout the opening hours. In short, though currency pairs displayed volatility, the gyrations offered little more than whiplash as the market on a whole failed to make strides in either direction.
The best representative of today's London Session thus far has been EURJPY. With EURUSD and USDJPY following the cross, the pair opened European trading around 164.30 and under pressure. This level served as decent support (there was a prior low around 164.23). Buyers came to the rescue and a quick rally to 164.50 ensued, lifting USDJPY off lows ahead of 117.00. Upon the topside break of 164.50, the pair aggressively ran to a high just short of 165.00. On the move, USDCAD dropped to 0.9850 support. Just as quickly as it rose, however, EURJPY reversed course and heading back lower, comfortably settling in to the mid-164.00 area as the market quieted until NY traders entered.
Today's release of the FOMC minutes from the September 18th meeting is expected to provide some indication of the Fed's current assessment of the economy and monetary policy status. At the September 18 meeting, the Fed caught the market off-guard by cutting the funds target rate by -0.50%. The aggressiveness of the policy easing implied that the FOMC viewed the credit squeeze as a threat to the economy. Investors will particularly be interested in whether the minutes reveal insight into the Fed's views going forward, and particularly whether the Fed thinks deeper cuts will be necessary to stop the housing slump and the economy.
Upcoming Economic Data Releases (New York Session)
- 1000 EDT Oct IBD Economic Optimism, consensus: 49.0