FED Minutes Shock, June Rate Hike on Table

U.S. Dollar Trading (USD) Surged past the key 95 resistance on the Dollar Index as the markets reacted to the Hawkish FED minutes from April which put a rate hike firmly back on the table for the June Meeting. “Most Fed Officials Saw June Hike ‘Likely’ if Economy Warranted” Was the line that got the market excited and we now turn our attention to two Fed Speakers tonight that may clarify the minutes further. FED Vice President Fischer speaks follower closely by NY FED Chief Dudley.

The Euro (EUR) Continued it push lower with both the Dollar and GBP ganging up to make the Euro one of the worst performing pairs in the market. The bear Targets have now been hit at 1.12 so it is dangerous to chase the selling here with a simple comment from a FED speaker later tonight enough to reverse the EUR/USD at these critical support levels. The Sterling (GBP) Was the strongest pair in the market surging higher on a fresh poll suggesting the Stay vote was widening its lead in the upcoming brexit vote. The55% Remain 37% leave on latest IPSOS MORI poll saw GBP/USD break above 1.46 but the even large moves was seen on the EUR/GBP which put in a major break lower. The EUR/GBP is now looking like a solid H&S pattern with the top in place at 0.8100 in Early April.

The Japanese Yen (JPY) Was sold off against the GBP and USD but the weakness in stocks saw it mixed against the other pairs. USD/JPY seized on the FOMC minutes to break above Y110 and in a show of strength held comfortably above the figure so far in Thursday trade. The next move will likely be dependent on whether stocks begin to ease more aggressively now that the FED June rate hike is on the table. The Australian Dollar (AUD)​ found no love from the USD strength and was hit from all angles as Oil began to fall and economic data underwhelmed. The April Employment figures were decent at 10k vs. 12k forecast but the details saw that 20k was part time jobs and this has been a theme in recent months suggesting widespread underemployment.

Stocks Indices(DAX) managed to find support at 9800 in early European trade but the brief rally yesterday has come back under pressure as we enter European trade today with many analyst suggest a FED rate hike in June will lead to a test lower in most global stocks. US Stocks (DOW) The next few days are going to be critical and the FEDspeak later tonight may break or make the Direction as US stocks threaten to break major support on both DJ and S&P.

Pairs to watch

USD/CAD broken 1.300, bigger move higher coming?

EUR/GBP Sell on rallies the trade going forward

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Economic Data Ahead

UK April Retail Sales forecast at 0.6% vs. -1.3% previously.

US FED Members Fischer and Dudley Speak

By Anthony Darvall (TonyD)