AUD/USD: 0.8975EUR/USD: 1.3350The FOMC Minutes have told us what we already knew but offer little to clarify exactly when the Fed will begin tapering and it therefore looks as though we have more of the same indecision ahead of us. Despite suggesting that tapering is on the cards by the end of the year, when the Fed generally expect the economy to have begun to pick up, they gave no further clue as to when this might happen, which means that the markets will continue to chop around, searching for direction. The dollar has caught a mild bid tone and equities are lower at the NY close and the general feeling is that September (FOMC: Sept 17th) could well be when we see some action from the Fed. Existing US home sales, which rose to 3 yr highs did nothing to argue with that view.
We may get some clue over the next couple of sessions, given that the annual Jackson Hole symposium gets under way today, before which, direction will be directed by the PMI data out of the EU /US. The initial jobless claim number will also be keenly watched (exp 322K) and a good number will most likely see further dollar gains as tapering looms nearer on the horizon.
The Euro has headed a bit lower, unable to overcome the spike the of the previous session of 1.3451, seeing a top today of 1.3426 and generally trading either side of 1.3400 for much of the day, before a quick spike to/from 1.3335 on the release of the minutes.
Technically then there is little change, except that the 4 hour indicators, which had previously been pointing higher, have now rolled over and suggests that the positive momentum may have run out of steam - at least for the next 24 hours. This could change if the EU PMI's are better than expected, but for the time being 1.3400 will now attract sellers, ahead of the resistance at the 100 Month MA at 1.3438. Above this would take the Euro back to 1.3450 and then to the top of the wedge formation that appears to be building at around 1.3475 which is also 76.4% of 1.3710/1.2753. If seen, the 1.3475 resistance should prove strong, but beyond there would suggest a run towards 1.3520 (13 Feb high) and potentially towards 1.3710 (1 Feb high).
On the downside, we could see another dip to the session 1.3335 low, below which would head to 1.3300, and then to 1.3280, which roughly ties in with 23.6% Fibo support of the rise from 1.2752/1.3451.
For the coming session we can again probably use 1.3330/1.3430 as a guide, with the short term indicators suggesting a test of the downside. With the dailies pointing a bit higher though, it could well be that dips will provide an opportunity for the next test of 1.34 and above, so stay flexible. I am beginning to suspect that 1.3450, seen yesterday may prove to be a relatively important medium term top - we shall see.
Economic data highlights will include:
Jackson Hole Symposium, EU Mfg, Services, Composite Flash PMI’s, US Jobless Claims, US Flash Mfg PMI.
