A note on lower timeframe confirming price action...

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails ... essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

We typically search for lower-timeframe confirmation between the M15 and H1 timeframes, since most of our higher-timeframe areas begin with the H4. Stops are usually placed 1-3 pips beyond confirming structures.

EUR/USD

For those who read Wednesday's report you may recall our team highlighting the green H4 area at 1.16/1.1615 as a potential buy zone. The area comprised of a psychological band at 1.16, a H4 38.2% Fib support level at 1.1606 pegged from the low 1.1479 and a daily support at 1.1615.

As can be seen from the chart the zone responded beautifully, and was made stronger after the Federal Reserve decided to leave interest rates unchanged, as expected. With offers likely cleared from 1.17, we're likely going to be crossing swords with H4 resistance at 1.1755 sometime today.

Also of particular interest, daily price ended the day marginally closing above the upper channel resistance line extended from the high 1.1263, and chalked in a reasonably strong-looking bullish candle. In the event that this move has cleared the majority of offers here, the next area of interest can be seen around a supply zone located nearby at 1.1870-1.1786.

Our suggestions: As price is nearing the underside of a major daily supply right now, we feel upside momentum may begin to diminish. In fact, we would refrain from taking any long positions at this time given that the unit is now only inches away from the noted H4 resistance which happens to sit only thirty pips beneath the current daily supply. Therefore, at least for the time being, our desk will remain on the sidelines.

Data points to consider: US Core durable goods numbers and US Weekly unemployment claims at 1.30pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

GBP/USD

During the course of Wednesday's sessions, the GBP/USD retested the 1.30 neighborhood and was met by strong buying pressure (influenced by the Fed's decision to leave interest rates unchanged). In yesterday's report, we placed 1.30 under the spotlight given that it fused nicely with July's opening level at 1.3003 and a 50.0% support at 1.3008 taken from the low 1.2932. Well done to any of our readers who managed to jump in on this move.

With H4 price now clear above the 1.31 handle, we feel it's reasonable to assume that the mid-level number 1.3150 will likely be the next target in the firing range today. What's also notable here is the approach: there is a nice-looking AB=CD bearish formation taking shape which terminates at exactly 1.3150 (see blue arrows).

Over on the bigger picture, the weekly candles remain trading around the upper edge of a supply zone pegged at 1.3120-1.2957, suggesting weakness in the sellers' camp right now. On the other side of the field, however, the daily chart shows price action to be trading from a support area coming in at 1.3058-1.2979. What's also interesting on this scale is the potential AB=CD bearish pattern that completes within the supply zone marked at 1.3278-1.3179 that converges with a channel resistance line drawn from the high1.2774.

Our suggestions: Although we believe a bounce will be seen from 1.3150 today, the market will likely look to strive to reach the 1.3180 mark since this price level represents the underside of the said DAILY supply and channel resistance line, which could, if it falls within your trading parameters, be a nice zone to look for shorts.

Data points to consider: US Core durable goods numbers and US Weekly unemployment claims at 1.30pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1.3180 region ([waiting for a H4 bear candle to form – preferably a full, or near-full-bodied candle – before pulling the trigger is advised] stop loss: ideally beyond the candle's wick).

AUD/USD

In recent trading, the commodity currency rallied to the upside following the Fed's decision to leave interest rates unchanged. The move lifted H4 price out of its range at 0.7969/0.79, and is now seen aggressively challenging the large psychological band 0.80.

Weekly action on the other hand, shows there's space for the unit to advance up to resistance marked at 0.8075. Down on the daily timeframe, nevertheless, the candles have now relocated above the channel resistance line taken from the high 0.7732, and opened up the possibility of a move being seen towards a nearby Quasimodo resistance at 0.8030.

Our suggestions: With 0.80 being a watched number in the market, there was likely a truckload of stop-loss orders (buy stops) triggered above this number in recent hours. This may be enough liquidity for the big boys to sell this market back down to the top edge of the H4 range at 0.7969. However, this is not something our team would feel comfortable trading, due to the room seen to advance higher on the bigger picture.

Ultimately, we have decided to wait and see if price can drive north into the 0.8075/0.8030 area (weekly resistance/daily Quasimodo resistance) and then go about looking to sell this market (a slightly different outlook from Wednesday).

Data points to consider: US Core durable goods numbers and US Weekly unemployment claims at 1.30pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 0.8075/0.8030 ([waiting for a H4 bear candle to form – preferably a full, or near-full-bodied candle – before pulling the trigger is advised] stop loss: ideally beyond the candle's wick)

USD/JPY

Beginning this morning's report with a look at the weekly timeframe, we can see that the unit is ranging between supply at 115.50-113.85 and demand at 108.13-108.95. Along similar lines, daily price is also seen sandwiched between support coming in at 110.76 and resistance at 111.91.

Looking across to the H4 candles, the market failed to generate much follow through buying above July's opening level at 112.09 yesterday, and went on to aggressively trade lower. The move, influenced by the Fed's decision to leave interest rates unchanged, saw price take out multiple H4 supports, before ending the day closing just ahead of the 111 handle.

Our suggestions: On account of the above notes, this is how we are looking at this market right now. The 111 handle will likely possess willing buyers who will place stops 10-20 pips beneath this number. Below 111 is June's opening level at 110.83, shadowed closely by a Quasimodo support at 110.76. Take note that this Quasimodo also aligns perfectly with the current daily support. So, given the stops (sell stops from both buyers looking to long 111 and also sellers looking to sell the breakout) planted beneath 111, we feel the big boys will breach 111 today and look to attack the 110.76 neighborhood for a trade long. The only grumble we have here, of course, is the fact that weekly price provides little support until we reach the 108.95 region. Despite this, we still feel the odds of a bounce being seen from the 110.76 level is relatively high.

Therefore, we have placed a pending buy order at 110.77, with a stop pegged below the Quasimodo apex at 110.60. With this position requiring a 17-pip stop and the first take-profit target being set at 111, this gives us over one times our risk to the first target on this trade.

Data points to consider: US Core durable goods numbers and US Weekly unemployment claims at 1.30pm GMT+1.

Levels to watch/live orders:

• Buys: 110.77 ([pending order] stop loss: 110.60).
• Sells: Flat (stop loss: N/A).

USD/CAD

Following the FOMC statement, the USD/CAD fell sharply. The move erased bids from the 1.25 handle and went on to clock a fresh low of 1.2413 on the day. Why price found support ahead of 1.24 is likely due to the fact that daily price connected with the top edge of a demand base coming in at 1.2303-1.2423. Despite this, the bulls appear incredibly weak on the weekly timeframe at the moment. The weekly support at 1.2538 has put up little to no fight so far, therefore allowing the unit to trade a considerable distance below it!

Our suggestions: The strength of the current downtrend – coupled with the noted weekly support showing no signs of bullish intent – does not really instill much confidence for those wishing to long from the aforesaid daily demand area.

With this in mind, today's spotlight will firmly be focused on 1.25 for a possible sell trade. 1.25 is not only a watched psychological number in this market, it is also a level that converges with a H4 trendline resistance extended from the high 1.2701 and a daily broken Quasimodo line at 1.2498.

Data points to consider: US Core durable goods numbers and US Weekly unemployment claims at 1.30pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (Stop loss: N/A).
• Sells: 1.25 region ([waiting for a H4 bear candle to form – preferably a full, or near-full-bodied candle – before pulling the trigger is advised] stop loss: ideally beyond the candle's wick).

USD/CHF

H4 price failed to sustain gains beyond July's opening level at 0.9580 on Wednesday, after the Fed decided to leave interest rates unchanged. In one fell swoop, the H4 mid-level support at 0.9550 was aggressively taken out, leaving price free to challenge the 0.95 handle, which, for now, is holding firm.

Yesterday's sharp move to the downside helped form a beautiful-looking daily selling wick, which, as you can see, pierced resistance at 0.9546. To a lot of traders, this will be a sell signal! However, until price has cleared the 0.96 handle, and also (for you long-term traders) the major weekly support area at 0.9443-0.9515, selling this market is difficult, in our humble opinion.

Our suggestions: Buying from 0.95, although you will be trading in-line with potential weekly flow, is challenging given the nearby daily resistance and selling wick. And, as we've already mentioned, selling is problematic given the 0.95 level and current weekly support area.

As far as we can see, technical elements are mixed at the moment, leaving us with little choice but to remain on the sidelines for now.

Data points to consider: US Core durable goods numbers and US Weekly unemployment claims at 1.30pm GMT+1.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

DOW 30

As was noted in Wednesday's report, we have seen the US equity market chalk up a potential H4 bullish pennant formation (21677/21462) over the past few weeks. Yesterday's action, however, pushed to the upside and clocked a fresh all-time high of 21727, consequently breaking the top edge of the said pennant pattern. We also mentioned in yesterday's analysis that a breakout to the upside would be a valid buy signal, but would not be a move we'd consider trading until the unit has retested the broken pennant edge (the blue area) as support. Of particular interest here is that the pennant edge also aligns nicely with a H4 38.2% Fib support at 21633.

Our suggestions: Should the H4 candles retest the pennant edge today (as per the blue arrows) and print a full, or near-full-bodied H4 bull candle, this would be enough for us to enter into a long position with stops pegged below the H4 bull candle's tail.

Data points to consider: US Core durable goods numbers and US Weekly unemployment claims at 1.30pm GMT+1.

Levels to watch/live orders:

• Buys: Watch for H4 price to retest the current H4 pennant upper edge ([waiting for a full, or near-full-bodied H4 bull candle to form following the retest is advised] stop loss: ideally beyond the candle's tail).
• Sells: Flat (stop loss: N/A).

GOLD

Across the board we saw the US dollar plummet on Wednesday after the Fed decided to keep interest rates unchanged. This lifted the appeal to own gold and thus raised the metal's price, consequently breaking through a daily resistance line at 1258.9. What this also achieved was potentially clearing the path north up to H4 resistance at 1269.8, which is located nearby a H4 AB=CD (see blue arrows) 161.8% Fib ext. point at 1273.1.

While 1273.1/1269.8 appears to be a relatively strong-looking sell zone (blue area), one always has to take into account where he/she is on the bigger picture. Weekly price shows room to advance all the way back up to an area comprised of two Fibonacci extensions 161.8/127.2% at 1312.2/1284.3 taken from the low 1188.1 (green zone). By the same token, the daily candles also now show space to extend up to a trendline resistance taken from the high 1337.3.

Our suggestions: A bounce from 1273.1/1269.8 will likely take shape should price connect with it today. How much of a bounce though is difficult to judge, given the bigger picture showing that the bulls currently have the upper hand. Personally, we will not be trading short from this barrier. Even with additional candle confirmation, we feel the risk is too great here.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

EUR/USD - 1.1730

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.1749

Kijun-Sen level                  : 1.1695

Ichimoku cloud top             : 1.1669

Ichimoku cloud bottom      : 1.1658

Original strategy  :

Sold at 1.1680, stopped at 1.1715

Position : - Short at 1.1680

Target :  -

Stop : - 1.1715

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

The single currency rallied on dollar’s broad-based weakness after Fed, the breach of previous resistance at 1.1712 confirms recent upmove has resumed, hence gain to 1.1780-85 (50% projection of 1.1370-1.1712 measuring from 1.1613) cannot be ruled out, however, loss of near term upward momentum should prevent sharp move beyond 1.1820-25 (61.8% projection), risk from there has increased for a retreat later.

In view of this, would not chase this rise here and would be prudent to stand aside in the meantime. Below the Kijun-Sen (now at 1.1695) would suggest an intra-day top is formed, bring test of the lower Kumo (now at 1.1658) but break there is needed to bring correction of recent rise towards support at 1.1613 first.

USD/JPY - 111.11

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 111.00

Kijun-Sen level                  : 111.49

Ichimoku cloud top             : 111.71

Ichimoku cloud bottom      : 111.36

Original strategy  :

Exit short entered at 112.00

Position :  - Short at 112.00

Target :  -

Stop : -

New strategy  :

Sell at 111.45, Target: 110.45, Stop: 111.80

Position :  -

Target :  -

Stop : -

The greenback ran into renewed selling interest at 112.20 and has tumbled after Fed, reviving our bearishness and signaling the rebound from 110.62 has ended at 112.20, hence consolidation with downside bias remains for another test of said support, break there would confirm recent decline has resumed and extend weakness to 111.34 (previous resistance turned support) but reckon downside would be limited to 111.10-15 and support at 110.83 should hold from here.

In view of this, we are looking to reinstate short on recovery as the Kijun-Sen (now at 111.49) should limit upside and bring another decline later. Above 111.75-80 would defer and prolong choppy trading, however, price should still falter below said resistance at 112.20, bring retreat later.

Global Markets:

• Asian stock markets: Nikkei up 0.10 %, Shanghai Composite fell 0.30 %, Hang Seng rose 0.35 %, ASX 200 rallied 0.30 %
• Commodities: Gold at $1264 (+1.20 %), Silver at $16.71 (+1.50 %), WTI Oil at $48.65 (-0.20 %), Brent Oil at $50.90 (-0.20 %)
• Rates: US 10-year yield at 2.28, UK 10-year yield at 1.24, German 10-year yield at 0.55

News & Data:

• South Korea GDP q/q 0.6 % vs 0.6 % expected
• Australia Export Price Index q/q -5.7 % vs -6.3 % expected

FOMC Meeting:

• Fed to start balance sheet unwind 'relatively soon'
• Repeats that inflation seen rising to 2%
• Says will reinvest holdings 'for the time being'
• Repeats that overall inflation measures ex food and energy have declined
• No dissents
• Says job gains 'have been solid'
• Household spending and business investment have continued to expand
• Repeats that near-term risks to the economy appear 'roughly balanced' but it is monitoring inflation developments closely

Markets Update:

The US Dollar came under renewed pressure following the FOMC statement. The central bank was more dovish than expected, and lowered its inflation expectations. Market participants are now questioning whether there will be another rate hike this year at all.

EUR/USD broke back above 1.17 and extended gains to 1.1775. There is now little resistance until 1.20, although the pair is already heavily overbought in the short-term. Support is now seen at 1.17 and 1.1620.

GBP/USD cleared resistance at 1.31 and reached a high of 1.3160. However, the Pound is likely to struggle to extend gains given the uncertainty around Brexit and the recent low inflation numbers.

USD/JPY is holding quite well given the broad Dollar weakness, but a test of 110 seems inevitable. Should that level break, a decline towards 108 seems likely.

AUD/USD caught a bid overnight and broke above 0.80 resistance without much struggle. There is now no major resistance until 0.82 and the pair is likely to test that level soon. Positive risk sentiment and rising commodity prices should keep the Aussie Dollar supported in the near-term.

Upcoming Events:

• 13:30 BST – US Core Durable Goods Orders
• 13:30 BST – US Initial Jobless Claims

Short term YM_F (Dow E-Mini Future) Elliott Wave view suggests the rally from 6/29 low is unfolding as a double three Elliott wave structure and ended with Minor wave W at 21628. Down from there, Minor wave X pullback unfolded as a running Elliott Wave flat. Minute wave ((a)) ended at 21457, Minute wave ((b)) ended at 21624, and Minute wave ((c)) of X ended at 21444. Index has since made a new high suggesting the next leg higher has started. Up from 21444 low, Sub Minutte wave a ended at 21640. And Sub Minutte wave b pullback ended at 21524, while above there expect Index to extend higher again.

Near term focus remains towards 21719-21769 100%-123.6% extension area from 21444 low to end the Minutte wave (w) higher. The index then has scope to see a pullback, which should then find buyer’s again in sequence of 3, 7 or 11 swings for further upside provided the pivot at 21444 low remains intact. We don’t like selling the Index and favors buying the dips against 21444 low in the first degree. If pivot at 21444 low fails, then the move higher from 6/29 (21138) can be seen as a 5 waves diagonal. In this case, Index should pullback in 3, 7, or 11 swing to correct cycle from 6/29 low before the rally resumes.

Dow E-Mini Future 1 Hour Elliott Wave View

Key Points:

• The PLNUSD has been powering higher over recent weeks.
• Technically, the pair is well placed to rally further.
• USD weakness will only help to spur the bulls into action.

Just for something different, we are looking at the Polish Zloty today as the currency has been making some solid gains on the greenback and it looks as though it could extend further still. Indeed, this exotic cross has been powering higher over the past few months – on par with even the Swiss Franc's solid performance.

From a technical perspective, it's easy to see why further gains are expected for this highly bullish pair. As shown below, the EMA bias is in the most bullish configuration possible and in little danger of seeing a shift in momentum any time soon. Additionally, momentum indicators such as the ADX are certainly suggesting that a very strong trend is in play which means it would likely take a decent fundamental upset to slow the accent.

What's more, whilst it is currently bearish, the parabolic SAR reading is on the cusp of inverting to bullish which could mean that we don't see the pair cool off for some time. Instead, we could see yet another push higher before the PLNUSD decides to return to the downside of the channel. Of course, this largely makes sense as the pair hasn't managed to fully test the upside constraint of the broader ascending channel since May.

If we do continue to see the pair advance, the Zloty could eventually reach as high as the 0.2821 mark over the next few weeks. At this point, there is a very distinct chance that it will be highly oversold and in need of a slip back to support. Exactly how far it will stumble is not yet clear, nevertheless, it should be able to hold above the 0.2750 level without too much trouble.

Ultimately, the outlook is fairly good for the PLNUSD moving forward and we can expect to see it enjoy the market's favour. This will especially be the case as the USD remains besieged by negative sentiment stemming from political turmoil in the US and recently refreshed concerns that the Fed cannot deliver on its long-touted rate hikes.

Asia Summary

Equities markets in the region opened generally higher absorbing the Fed rate decision in stride. Earnings season is now in full swing around the globe with Nintendo in Japan putting out strong results after the close yesterday, in Korea Samsung Electronics reported final Q2 results a bit higher than prelim. The dollar saw a broad sell off over the session, with the biggest moves coming about mid-day. EUR/USD rose to 1.1777, AUD/USD 0.8066 and USD/JPY tested 110.78. Korea's won gained 1% against the USD, while copper held steady around a 2-year high in London as markets process China's scrap import ban.

The PBOC shifted its OMO to using just 7-days, dropping its use of 14-day reverse repos, operations were small with a total net injection of CNY20B. Chinese press said that China is exploring a multi-tiered reserve requirement system in order to address liquidity strains. Offshore yuan nearly reached a 2-month high. Markets were little impacted by economic data in the session.

Key economic data

(BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC TARGET RATE BY 100BPS TO 9.25%; AS EXPECTED

(KR) SOUTH KOREA Q2 PRELIM GDP Q/Q: 0.6% V 0.6%E; Y/Y: 2.7% V 2.7%E

(CN) CHINA JUN SWIFT GLOBAL PAYMENTS (CNY): 1.98% V 1.6% PRIOR

(JP) Japan investors net bought ¥1.18T in foreign bonds v bought ¥947B in prior week; Foreign investors net bought ¥292B in Japan stocks v bought ¥377B in prior week

(AU) AUSTRALIA Q2 IMPORT PRICE INDEX Q/Q: -0.1% V 0.7%E; EXPORT PRICE INDEX Q/Q: -5.7% V -5.5%E

(CN) CHINA JUN INDUSTRIAL PROFITS Y/Y: 19.1% V 16.7% PRIOR

Speakers and Press

China

(CN) Chinese Academy of Social Sciences (CASS) and former PBOC Adviser Yu: capital outflows are more likely to be a larger source of systemic risk in China than high debt - China press

(CN) China Ministry of Finance (MOFCOM): China to keep increasing imports from US

(CN) Moody's revises outlook on China banking system to stable from negative

Korea

(KR) Intelligence authorities see Kim Jong Un's motorcade near missile site, seen as a sign launch is imminent at missile site in northwestern North Korea

(KR) Bank of Korea (BOK) OfficialChung: consumption and investment led to Q2 GDP growth; see private consumption to continue improving

Japan

(JP) Japan Govt recommends minimum wage increase of 3% or ¥25 to ¥848/hr (same rate as last year)

(JP) Luxury goods brands such as Chanel and Cartier said to raise prices in Japan in Aug due to FX rate shifts - Nikkei

Other

(TW) Taiwan and US to focus on medical sector in trade talks - Taiwan press

Asian Equity Indices/Futures (00:00ET)

Nikkei +0.2%, Hang Seng +0.5%, Shanghai Composite -0.3%, ASX200 +0.3%, Kospi +0.2%

Equity Futures: S&P500 +0.2%; Nasdaq +0.5%, Dax +0.1%, FTSE100 +0.2%

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.1776-1.1721; JPY 111.22-110.78; AUD 0.8065-0.7992; NZD 0.7558-0.7517

Aug Gold +1.2% at 1,264/oz; Sept Crude Oil -0.1% at $48.69/brl; Sept Copper +0.2% at $2.88/lb

USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT 6.7307 V 6.7529 PRIOR

(NZ) New Zealand sells NZ$150M in 3.5% 2033 bonds; avg yield 3.2996%

(CN) China PBOC OMO injects CNYB in 7 day reverse repos v CNY130B in 7 and 14 day prior

(JP) Japan MoF sells ¥400.1B v ¥400B indicated in 2-yr 0.1% (prior 0.1%) JGBs; Avg yield: -0.1150% v -0.103% prior; bid to cover: 5.35x v 6.79x prior

Equities notable movers

Hong Kong/China

Sands China, 1928.HK Reports Q2 Net profit $326M v $237M y/y, Rev $1.82B v $1.48B y/y; -0.3%

Dongfang Electric ,1072.HK Guides H1 Net CNY370M; +7.6%

Japan

Nintendo, 7974.JP Reports Q1 Net ¥21.3B v ¥7.6Be; Op ¥16.2B v ¥10.6Be; Rev ¥154.1B v ¥62.0B y/y; +7.1%

Korea

Samsung Electronics,005930.KR Reports final Q2 (KRW) Net 10.8T v 9.8Te; Op 14.07T v 14.0T prelim; Rev 61.0T v 60.0T prelim; to buy back KRW1.67T of shares; flat

Other

United Microelectronics, UMC Reports Q2 net (NT$) 2.10B v 1.27Be, Rev 37.5B v 37.0B y/y; -8.1%

US markets on close: Dow +0.5%, S&P500 flat, Nasdaq +0.2%, Russell -0.6%

FX Market s' Predisposition To Buy EUR/USD

Market Movers Today

In the euro area, the most important data release today is money supply and private sector bank lending. In June, lending to households and non-financial corporations continued their upward t rend, meaning t he ECB's accommodative monetary policy is feeding through to the private sect or. This should eventually generate higher inflation but t he ECB's is being challenged current ly by a stronger euro, which is a strong headwind to inflation.

US core capital goods orders are due for release and consensus is for another modest increase. Over the past months, the figure has disappointed, implying that fixed investments growth did not look like a strong contributor to GDP growth in Q2. As private consumption is also growing at a slower pace than anticipated, this paints a more modest picture for GDP growth than we had expected.

In scandi markets, we will get the release of the Norwegian LFS and Swedish unemployment rates together with the Swedish Economic Tendency Survey and household lending. Otherwise, focus will remain on Swedish politics.

Selected Market News

As expected, the Fed kept interest rates unchanged yesterday, leaving all eyes on the statement. Overall, our interpretation of the statement was that it was a little dovish even if we did not get that much new information apart from two phrases. The first was on the process of unwinding the balance sheet , which may st art ‘relatively soon' instead of ‘this year', which in fact is not new as it reflects the choice of words Fed Chair Janet Yellen used during the press conference in June. More significantly, the Fed stated t hat inflation is now running ‘below' 2% (before ‘somewhat below'), which supported FX market s' predisposition to buy EUR/USD, sending the cross above the multi-year top from 2015. Overall, we think the Fed statement supports our call that the Fed will make an announcement on quantitative tightening at the next meeting in September and on the back of a strong belief in the Phillips curve, st ill hike rates in December. Importantly, we think risks are skewed towards the Fed pausing its hiking cycle further into 2018. For more information, see our full FOMC review here.

Yesterday's EIA data showed a larger-than-expected drop in US oil inventories, which aided Brent crude temporarily above USD 51/bbl for the first time since early June. The rebound in the oil price has supported the traditional oil currencies including the NOK. Despite the latest NOK rally, however, we see positioning, technicals and short -term valuation as increasing headwinds. As such, even if we remain medium- to long-term bullish on the NOK, we do see a risk of a temporary setback over the next month.

In Sweden, the four Alliance Parties said they will request a vote of confidence for three of the Red/Green governments SDP ministers (infrastructure, interior and defence) because of their wrong handling of the IT scandal in the Swedish Transport Agency, which has had big implicat ions for possible leaks about national security. The ministers have also been criticised for not giving this information to the Riksdag. Prime Minister Stefan Lövfven has announced a press conference today at 10:00 CET. He basically has four opt ions: (1) to dismiss the three ministers, (2) to dismiss the infrastructure minister but let the other two stay (supported by the Left Party), (3) to announce an elect ion and (4) the government resigns, letting the Riksdag speaker look for a government constellation (could be the same, could be a new). None of these are particularly appealing. Either way, we see no reason for a significant market reaction.

For the 24 hours to 23:00 GMT, the AUD rose 0.71% against the USD and closed at 0.7996.

LME Copper prices climbed 1.4% or $88.0/MT to $6238.0/MT. Aluminium prices rose 0.8% or $15.5/MT to $1912.0/MT.

In the Asian session, at GMT0300, the pair is trading at 0.8048, with the AUD trading 0.65% higher against the USD from yesterday's close.

Earlier today, data showed Australia's import price index unexpectedly eased 0.1% QoQ in 2Q 2017, compared to an advance of 1.2% in the previous quarter and defying market consensus for a gain of 0.7%. Moreover, the nation's export price index fell more-than-expected by 5.7% on a quarterly basis in 2Q 2017, compared to a revised rise of 8.8% in the previous quarter.

Elsewhere, in China, Australia's largest trading partner, industrial profits rose 19.1% an annual basis in June, after recording a rise of 16.7% in the prior month.

The pair is expected to find support at 0.7934, and a fall through could take it to the next support level of 0.7819. The pair is expected to find its first resistance at 0.8107, and a rise through could take it to the next resistance level of 0.8165.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the EUR rose 0.71% against the USD and closed at 1.1729.

In economic news, Italy's consumer confidence index unexpectedly advanced to a level of 106.7 in July, compared to market expectations of a fall to a level of 106.2. In the prior month, the index had registered a reading of 106.4.

On the other hand, French consumer confidence index surprisingly dropped to a level of 104.0 in July, after rising to a decade high level of 108.0 in the prior month, while markets expected the index to record an unchanged reading.

The greenback lost ground against a basket of major currencies, after the Federal Reserve (Fed) hinted that it may start rolling back its $4.5 trillion balance sheet as soon as September and expressed concerns on subdued inflation.

The Federal Open Market Committee (FOMC) decided to leave interest rates unchanged, keeping its overnight lending rate at 1.00% to 1.25% as it remained slightly concerned about recent inflation trends. However, the central bank stated that it expects to start winding down its massive balance sheet “relatively soon”, provided that the economy evolves broadly as anticipated.

On the macro front, new home sales in the US climbed 0.8% on a monthly basis, to a level of 610.0K in June, while investors had anticipated for it to rise to a level of 615.0K. New home sales had registered a revised reading of 605.0K in the previous month. Moreover, the nation's MBA mortgage applications rose 0.4% in the week ended 21 July 2017, after recording a gain of 6.3% in the previous week.

In the Asian session, at GMT0300, the pair is trading at 1.1745, with the EUR trading 0.14% higher against the USD from yesterday's close.

The pair is expected to find support at 1.1656, and a fall through could take it to the next support level of 1.1567. The pair is expected to find its first resistance at 1.1791, and a rise through could take it to the next resistance level of 1.1837.

Going ahead, investors will look forward to Germany's GfK consumer confidence index for August, slated to release in a few hours. Additionally, in the US, initial jobless claims as well as flash durable goods orders, advance goods trade balance and flash wholesale inventories, all for June, slated to release later in the day, will keep investors on their toes.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.