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DailyFX US AM Digest: US Dollar Awaits FOMC Guidance on 2018 Rate Path

DailyFX US AM Digest: US Dollar Awaits FOMC Guidance on 2018 Rate Path

Research, Research Team

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It’s been a quiet start to the week thus far but that should change over the coming days as the economic calendar is saturated with top tier event risk. Five central banks, including the Federal Reserve today and the European Central Bank tomorrow, will be releasing their final policy decisions for 2017 through the end of this week. Despite the low volatility environment that characterized trading on Monday and Tuesday, it would appear that price action is poised to liven up. The US Dollar is trading slightly lower ahead of the FOMC meeting later after the November US CPI report showed that disinflation was evident in the core readings.

DailyFX Economic Calendar: Wednesday, December 13, 2017 – North American Releases

Following the November US CPI report earlier, all attention is now on the Federal Reserve’s final policy meeting of the year. The policy statement and new Summary of Economic Projections (SEP) will be released at 14 EST/18 GMT, while outgoing Fed Chair – presiding over her second-to-last meeting – will start the press conference 30-minutes later. The key issue today is whether or not the FOMC maintains its current trajectory of projected rate hikes (three for 2018) and if it decides to maintain or change its growth and inflation forecasts. With Fed funds futures contracts pricing in a 100% chance of a 25-bps rate hike today, it will take more than a bit of expected policy tightening to get the US Dollar moving higher when all is said and done.

DailyFX Webinar Calendar: Wednesday, December 13, 2017

IG Client Sentiment Index Chart of the Day: USDJPY

Learn more about the IG Client Sentiment Index on the DailyFX Sentiment page

USDJPY: Retail trader data shows 48.1% of traders are net-long with the ratio of traders short to long at 1.08 to 1. The number of traders net-long is 0.2% lower than yesterday and 15.4% lower from last week, while the number of traders net-short is 6.1% lower than yesterday and 31.6% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDJPY prices may continue to rise. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed USDJPY trading bias.

Five Things Traders are Reading

  1. “Preview for December FOMC and Implications for US Dollar” by Christopher Vecchio, CFA, Senior Currency Strategist
  2. “Technical Overview for Euro, Yen, EUR & GBP Cross-rates, Gold and More” by Paul Robinson, Market Analyst
  3. “Silver Technical Outlook: Declining Towards Long-term Support” by Paul Robinson, Market Analyst
  4. “GBP Steady After Wages Data, All Eyes Now on The Fed” by Martin Essex, MSTA, Analyst and Editor
  5. “US Dollar May Rise as Fed Maintains Call for Three Hikes in 2018” by Ilya Spivak, Senior Currency Strategist

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.