The Federal Reserve moved in line with market participants' expectations. The word patience was dropped.The rates hike is imminent, but within slow and steady policy. The Fed does not hasten to rase it immediately. The Fed will start hike its interest rates in June/September. Probably, in 2017 we can expect the previous interest rate of 3.5%.
Views
The Morgan Stanley chief US economist said that the Fed will not raise interest rates in 2015 due to the inflation rate and the weak dollar.
Deutsche Bank: The Fed is clearly worried that removing of the word "patience" would cause the opposite reaction with market expectations. In the end of the year, the United States is expected to cut the federal funds rate 25 basis points to 1.0 percent and down 50 basis points in 2016 to 2.0%.
The experts at Goldman Sachs still expect that the Fed will raise interest rates in September; a bitmap displays that 2015 will, most likely, have two 25-basis-point rate hikes, instead of three times.
Today, traders keep an eye on the US unemployment claims, Philly fed manufacturing data. Positive readings help the US dollar take leadership back.
USD/CAD
The Canadian dollar rallied almost 2% against USD during the yesterday's session. The pair breaks and closes below 20DSMA. Today, during the early Asian session, 20DSMA is acting as strong resistance. The pair prepared a strong support base between 1.2350 and 1.2300 200MSMA. Until prices close above 1.2300, buy on dips still remains in play. During the yesterday's session, the pair took support from 50DSMA 1.2448 and move higher. Intraweek support is at 1.2448. The pair corrects almost 80% from its recent move from 1.2350 to 1.2824. We recommend buying with SL at 1.2448 on a closing basis with targets 1.2595, 1.2650 and 1.2720. We can expect strong upswing above 1.2750 towards a fresh high. Today, ahead of big economic data, the US dollar is trading lower against the loonie and yen. We recommend selling below 1.2440 with targets 1.2400 and 1.2350. My strategy of buying on dips remains in play with SL at 1.2300.
USD/JPY
The yen gains the leadership quality after the Fed meeting. Profit fixing action takes place on theUS dollar, leadership status shifted to the yen. The yen is trading higher against USD, EUR and GBP. During the yesterday's session the pair closed below 20DSMA. Today, during the Asian session, the pair is not able to breach above 20DSMA. The immediate resistance seems to be at 120.50 and 120.80. We can expect a huge spike above 120.80. Parallel support is at 119.00 50DSMA. We recommend buying with SL at 118.90. This view is valid up to this weekend.
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