US Federal Reserve left rates unchanged, as expected, but opened the door for monetary policy tightening towards the end of the year. Fed said that near-term risks to the US economy have reduced, as the economy expanded in a moderate rate and jobs sector strengthened in June. Also, strong growth in household spending and increase in labor utilization, add on hopes of rate hike.
Fed is going to continue monitoring the inflation which remains below projected levels for more than four years, as well as watching global economic and financial developments.
Fed policy makers had urged caution in raising rates until there was concrete progress in moving inflation towards 2% target.
The US dollar slipped across the board on modestly hawkish Fed on Wednesday. Against Euro, the dollar fell near 1.1100 support, while dollar/yen dipped to 104.46 low. The Japanese yen also gained on speculation that the Bank of Japan won’t deliver radical stimulus on its two-day meeting that ends on Friday. However, traders expect yen to be highly volatile on Friday, after the central bank delivers its statement, with press conference of BOJ’s governor to be closely watched for clues to future policy.
Sterling eased from fresh recovery high at 1.3245, posted on stronger–than-expected UK Q2 GDP data, with fresh upside action seen in early European trading. Sterling holds positive near-term tone, gained on GDP data, despite overall outlook, overshadowed by the strongest fall in retail sales in four years and persisting fears of recession after the UK voted to exit European Union.
Antipodean currencies inched higher on Thursday, supported by weaker US dollar. Australian dollar firms above 0.7500 handle, with focus at RBA’s policy meeting next week. Australian central bank is expected to cut rates, as inflation stays well below projected target band of 2/3%.
Precious metals were also higher after Fed and hold tall in early Thursday’s trading. Spot gold is holding at $1340 zone that marks the mid-point of recent $1375/$1310 pullback, after gaining around 1.5% on Wednesday. The yellow metal’s technical studies are returning into full bullish mode that is seen supportive for further gains.
Highlights of the day

Europe
German unemployment data are the first highlight of the European session. The German Bundesbank releases unemployment figures, with analysts predicting that the amount of people out of work will fall to 4,000 in July from 6,000 in June. The country’s month-on-month unemployment rate is expected to remain the same at 6.1%.
Germany inflation is expected to be 0.2% in July compared to 0.1% in June.

America
US Jobless Claims data are due at 12:30 GMT. Consensus is forecasting that new claims will rise to 261K from 253K last week. Last week’s decline to a three-month low shows that demand for labour was high. The figure has been under 300,K for the last 72 straight weeks, indicating a strong work market.
Important levels
CRUDE OIL
US oil price dipped to fresh low at $41.67, last seen in April, after meeting its Fibonacci 38.2% target at $41.87. Strong fall of five consecutive days is likely to extend, as global oversupply and bearish technical studies keep oil price under strong pressure. Oil price is looking for break below strong support at $41.50 (Fibo 61.8% of $35.22/$51.65 upleg), for extension towards psychological $40.00 support.
Initial resistance lies at $42.35, followed by $43.18/35 and falling Tenkan-sen line at $44.24.
EURUSD
The Euro extends Wednesday’s rally that broke several strong barriers and probes above round-figure 1.1100 resistance in early Thursday’s trading. Near-term technicals turned in full bullish mode and suggest further recovery that is also supported by weaker dollar. The price s looking for next targets and pivotal points at 1.1063/85, break of which would trigger stronger upside action.
Broken 200SMA now acts as good support at 1.1076, followed by 1.1050 (session low)., Market Analysis