On Tuesday the euro/dollar spent the day in a sideways trend with a 50 point range. The euro received support from the euro/pound which was up sharply after the publication of a survey by the Telegraph.
The survey showed that 49% of those asked would like the UK to leave the EU, with 47% saying they would prefer to remain in the union. 823 people took part in the survey and it was held by telephone between 11th and 14th March of this year. The referendum is planned for 23rd June. Surveys are a decent instrument to manipulate exchange rates as results constantly change.
US statistics came out ambiguous. Retail sales were better than expected, but the previous was reassessed down. The New York business activity index was better than expected. The YoY growth in the base PPI is also worth a mention. The euro/dollar stabilised at 1.11.
Today"s market attention is on the FOMC meeting outcome. It"s expected that the Fed will keep interest rates unchanged. After the meeting there will be a press conference with Janet Yellen. If she comes out with anything surprising about the economy and the perspectives for a growth in rates, the dollar will strengthen by the day"s end and the euro will fall. Any hint at the Fed putting off a rate hike or a loosening of monetary policy will cause a fall in the dollar throughout the market.
Before 20:00 EET I expect to see a continuation of the sideways. Keep an eye on movements of the euro/pound. The rate is by the U3 line. After yesterday"s rally, it could switch into a correctional phase and cause a wave of euro sales against USD.
Day"s News (EET):
11:30, UK February unemployment benefit applications, ILO unemployment figures for January and average salaries.
14:30, Canadian changes in manufacturing deliveries and operations with foreign securities in January. US foundation laying and construction permits for February, in addition to February CPI. UK year"s budget.
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15:15, US industrial production for February.
16:30, US changes in oil reserves from Ministry for Energy.
20:00, US interest rate decision, economic forecast and FOMC announcement.
20:30, FOMC press conference.
The euro/dollar has stabilised at 1.11 under the LB. Before the Fed decision we can expect to see a sideways at the current level.
Could the euro stray off wildly from its current level before 21:00? It could well do. Announcements from representatives on rates, surveys, rumours, a thin market before important data: all these factors could cause real fluctuation.