Several Key FX Crosses at Potential Turning Points
- See the DailyFX Economic Calendar for Thursday, October 27.
On a broad basis (as measured by either DXY Index or USDOLLAR Index), the US Dollar remains well-supported as Fed funds futures confidently point to a December rate hike. For now, as long as these rate expectations remain firm, the US Dollar should remain insulated; the November FOMC meeting next Wednesday should do little to move the needle in context of the US elections around the corner the following Tuesday.
With such significant event risk ahead, several key FX crosses find themselves at potential inflection points. USD/JPY, for example, may be pivoting through the key ¥104.35 area outlined on Monday, which has implications for other JPY-crosses like AUD/JPY and GBP/JPY.
Speaking of GBP/JPY, the GBP-crosses have had a nice little kick higher the past few days as a few developments in the ongoing Brexit saga have relieved some growing concerns about the BOE's independence and Mark Carney's job security. However, after reassurances from UK Prime Minister Theresa May and from member of her cabinet, markets are shrugging off the notion of a politically-driven agenda for the Old Lady of Threadneedle Street.
Concurrently, with the kick higher in UK economic data the past few days - CPI and GDP have surprised to the topside - there is scope for short-term bottoming in both GBP/JPY and GBP/USD (look at the 1-hour or 4-hour timeframes).
--- Written by Christopher Vecchio, Currency Strategist
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