Market Drivers – US Session, September 18

Mohamed Abdelhamid 19 September, 2023 2:01 am Forex Market, Market Update

The US Dollar modestly declined but remained above 105.00 on a calm week start. It marked the first daily loss after nine consecutive days of gains. This correction has taken place during quiet trading circumstances as markets await key central bank meetings. On Wall Street, stocks opened the week with marginal gains, while US Treasury yields remained relatively stable.

Economic Data

On Tuesday, housing data including Housing Starts and Building Permits will be released. The FOMC meeting will kick off. No change in interest rates is expected, but market focus will be on the dot plot, which represents policymakers’ projections of future interest rates, as well as the press conference by Fed Chair Powell.

UK consumer inflation data will be released on Wednesday, and the Bank of England will announce its monetary policy decision on Thursday.

Market Developments

EUR/USD rose for the second consecutive day, encountering resistance at the 1.0700 area. However, the overall trend remains bearish. Eurostat will release the final reading of the Eurozone Consumer Price Index (CPI), which is expected to offer no surprises. Also, they will publish the July Current Account figures.

Sterling continued to show weakness; GBP/USD failed to recover beyond the 1.2400 level. It ended the day unchanged after reaching new monthly lows. Meanwhile, EUR/GBP recorded its highest daily close in a month, surpassing the 0.8600 mark.

USD/CHF held near September highs and settled around 0.8670; it continues to look at the 0.9000 area. Switzerland will report trade data on Tuesday, and on Wednesday, the Swiss National Bank (SNB) will hold its monetary policy meeting; a 25 basis points rate hike is expected.

The Canadian Dollar continued to outperform, causing USD/CAD to reach its lowest daily close in over a month, falling below 1.3500. The following key support level to monitor on the downside is the 200-day Simple Moving Average (SMA) at 1.3460. On Tuesday, Canada is set to release the August Consumer Price Index (CPI), with expectations of an annual rate rebounding to 3.8% from 3.3%. This would signal a second consecutive acceleration in CPI.

USD/JPY traded in a sideways manner and recorded slight losses. The crucial resistance level to watch is around 148.00. The Bank of Japan will announce its monetary policy decision on Friday.

AUD/USD maintained a sideways movement, hovering around the 20-day Simple Moving Average (SMA) at 0.6420. The Reserve Bank of Australia (RBA) is scheduled to release the minutes of its August policy meeting, during which policymakers decided to keep the cash rate unchanged at 4.1%.

What to watch on Tuesday

The RBA will release the minutes of its September meeting on Tuesday. Later in the day, Eurostat will release the final CPI. Canada is scheduled to release August inflation data, while the US will report on Housing Starts and Building Permits.

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