Markets are awaiting results of FOMC two-day meeting which concludes today, for more clues about Fed’s rate hike stance. Initial optimism for early rate hike faded after disappointing US jobs data and subsequent dovish comments from Fed’s top officials. However, Fed’s chair Janet Yellen left the door open for rate hike in the near future, with focus on US economic indicators and global economic situation, which are seen as key factors in Fed’s decision.
In addition, Brexit referendum, which is due in few days, is another crucial factor, not only for Fed’s rate policy decision, but for the global economy, as a key risk for 2016.
Recent polls showed wide amplitude of expectations of referendum results, caused high volatility and nervousness in the markets. Fed is likely going to wait referendum results before making any decision, with possible action seen in July or September, according to expectations.

The US dollar index pulls from fresh nearly two-week high at 95.14, posted on Wednesday, maintaining positive sentiment against Euro and Sterling, which consolidate above fresh lows at 1.1185 and 1.4086 respectively.
The Euro was pressured to fresh 11-day’s low by German 10-year yields which turned negative for the first time, while Sterling remains pressured by rising fears that Britain might vote to leave European Union.
Investors are cautious ahead of Fed’s policy decision which is due later today.
The dollar is also taking a breather against safe-haven Japanese yen which was the top performer of past sessions, as rising uncertainty in the global markets reduced risk appetite and increased demand for safe-haven.
Dollar/yen bounced above 106.61, low of Tuesday, which lies just ticks ahead of key support and short-term target at 105.53.

Gold also maintains its safe-haven appeal, holding in narrow consolidation above fresh high at $1287, expressing investors’ caution ahead of today’s FOMC decision, but maintaining bullish sentiment and keeping an eye at key barrier and short-term target at $1300 zone.
US Crude oil fell further on Wednesday, pressured by mounting concerns about Britain’s possible exit from European Union, which would drag the Europe back into recession and again reduce demand.
WTI oil fell to 3-week low at $47.55 in early Wednesday’s trading, on extension of the fall for the fifth consecutive day.
Rise in crude inventories by 1.2 million barrels, compared to forecasted draw of 2.3 million barrels on Tuesday’s API data, put additional pressure on oil’s prices.

Today’s highlights

The calendar is full for Wednesday, with UK jobs data being the highlight of the European session. UK’s jobless claims are forecasted to fall in May, according to -0.1% forecast, compared to April’s -2.4% figure, while unemployment is expected to stay unchanged at 5.1% in April.
Average earnings are seen lower in April on 1.7% consensus, against March’s release at 2.0%.

American session kicks wit Canadian data, due at 12:30. Manufacturing Sales are forecasted at 0.6% in April, well above March’s figure that showed decrease by 0.9%.

US Industrial Production shows negative forecast of -0.2% for the month of May, falling from April’s 0.7%. Data are due at 13:15 GMT.
US EIA Crude Oil Inventories are due to be released at 14:30 GMT, with draw of 2.25 million barrels forecasted for the week behind, below previous week’s draw of 3.2 million barrels.

Key releases of the day, FOMC rate decision and speech of Fed’s Chair Yellen are due at 18:00 and 18:30GMT respectively. Fed is expected to keep US interest rates unchanged at 0.50% in June’s meeting, but investors are awaiting Yellen’s speech to get more clues about Fed’s near-future actions.

Important levels

EURUSD consolidates above fresh lows at 1.1185, with limited upside action seen so far and extended sideways mode, expected ahead of FOMC.
Initial resistance lays at 1.1217 (cracked daily Ichimoku cloud base), which limits upside attempts for now, followed by1.1228/40, consolidation tops.
Above here, next layers of resistance lay at 1.1275 and 1.1300, also marking upside triggers.
On the flip side, session low at 1.1185 marks initial support, followed by 1.1135 and key 1.1096 support.

GBPUSD consolidates recent losses that reached 1.4086 low, ticks ahead of next target at 1.4070 and psychological 1.4000 support, which is in near-term focus. Strong bearish sentiment maintains downside risk for possible probe below 1.4000 handle and fresh bearish acceleration towards key support at 1.3834, low of 2016.
Initial resistance lies at 1.4246, followed by 1.4275 and key barrier at 1.4300, daily cloud base.
USDJPY maintains firm bearish tone but shows hesitation ahead of key support at 105.53, which was approached on yesterday’s bearish extension to 105.61. Extended consolidation is seen as likely near-term scenario, with initial barrier at 106.40, followed by 106.86 and 107.25.
Below 105.53, immediate supports lay at 105.43 and 105.18, with further bearish acceleration seen towards 104 zone.

 , Market Analysis