Currency Pair Overview Ahead Of The FOMC Decision

Overall, the market continued to move slowly in the European session, as in the Asian session, despite the loaded economic calendar. However, momentum is expected to pick up later in the day, as the market anticipates the FOMC interest rate decision. Most of the majors are trading near important swing areas, so the interest rate decision will probably dictate the direction of trade for the next period.

The Euro (EUR/USD) posted small declines in the overnight session, even though the volume has been limited. Previously, the euro has strengthened for about a week in which it gained nearly 1000 pips. The euro traded at the Asian open within a few pips from the 100-day moving average, for the first time in the last few months.

The German service PMI was released at 46.4, showing the industry has contracted during the last three months, while the manufacturing index came at 33.5, lower than expected. It seems that the manufacturing side of the economy is being affected much more by the global slowdown than the service side. The European PMI service shows that both the service and manufacturing side of the economy are still in a contraction phase. This is the seventh consecutive month when the two indexes have shown a read below the 50.0 level, which separates contraction from growth

The Pound (GBP/USD) fell 80 pips in the overnight session, and has been by far the most active pair. However, in normal market conditions the pound would have moved a triple digit number of pips. So far, the pound has barely found the strength to break away from the Asian open price in the early European session.

The U.K. Consumer Prices Index fell in November to 4.1%, from 4.5% one month earlier. The Core CPI read, which excludes volatile items, actually rose to 2.0%, higher than market expectations. There were significant downwards pressure from the transport industry and housing and household services, mostly due to the declines seen in the energy market. However, there was upward pressure coming from food and non-alcoholic beverages and from recreational and cultural services.

The Aussie (AUD/USD) moved around the neutral pivot point (0.6695) in the Asian and European sessions, but was unable to break significantly in either direction. Currently, the market is looking forward to the U.S. open, when the majors may start to move once again.

The trend estimate for the total number of dwelling units in Australia fell 10.7 percent in the quarter that ended in September. The estimate for new homes fell 3.9 percent and residential buildings fell 4.9 percent.

The Cad (USD/CAD) followed the market as a whole, and moved very little. The pair’s trading range reached 50 pips overnight, trading around the neutral pivot point (1.2340). For the moment, the cad trades trapped between the 20 and the 50-day moving averages, unable to break in either direction.

The Swissy (USD/CHF) traded literary flat during the overnight session, unable to move. This has been the pattern of trading from the last few weeks, where the swissy range traded during both the overnight and the mid to late U.S. sessions, and only around the U.S. open did the pair find the strength to move.

Industrial production in Switzerland fell by 5.2%, beating market expectations. The previous reports showed the released number can be volatile, and very often deviates from the expected number. However, from one year earlier, industrial production in Switzerland rose 0.7%.

The Yen (Usd/Yen) fell to TheLFB S1 (90.10) in the overnight session. This level also matches the low reached one day earlier. Lately, the yen moves very little, as some suggest the BoJ might intervene in the currency market.

Japans tertiary industry activity index came in at 0.4 percent for October. This was much higher than the analysts’ expectations for the month. Industries that contributed to the increase were; information and communications, wholesale and retail trade, electricity, gas, heat supply and water, finance and insurance, medical health and welfare, learning support and compound services. The industries that contributed to the decrease were; transport, eating and drinking places, accommodations, services and real estate.